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Regulations Implementing Section 11 thereof as promulgated by the DAR


EN BANC
on January 9, 1989 (Rollo, pp. 2-36).: rd
[G.R. No. 86889 : December 4, 1990.]
Hence, this petition praying that aforesaid laws, guidelines and rules be
192 SCRA 51 declared unconstitutional. Meanwhile, it is also prayed that a writ of
preliminary injunction or restraining order be issued enjoining public
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE respondents from enforcing the same, insofar as they are made to apply to
DEPARTMENT OF AGRARIAN REFORM, Respondent. Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among
DECISION others, Luz Farms' prayer for the issuance of a preliminary injunction in its
Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved
PARAS, J.: to grant said Motion for Reconsideration regarding the injunctive relief, after
the filing and approval by this Court of an injunction bond in the amount of
P100,000.00. This Court also gave due course to the petition and required
This is a petition for prohibition with prayer for restraining order and/or the parties to file their respective memoranda (Rollo, p. 119).
preliminary and permanent injunction against the Honorable Secretary of
the Department of Agrarian Reform for acting without jurisdiction in The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-
enforcing the assailed provisions of R.A. No. 6657, otherwise known as the 168).
Comprehensive Agrarian Reform Law of 1988 and in promulgating the On December 22, 1989, the Solicitor General adopted his Comment to the
Guidelines and Procedure Implementing Production and Profit Sharing under petition as his Memorandum (Rollo, pp. 186-187).
R.A. No. 6657, insofar as the same apply to herein petitioner, and further
from performing an act in violation of the constitutional rights of the Luz Farms questions the following provisions of R.A. 6657, insofar as they
petitioner. are made to apply to it:

As gathered from the records, the factual background of this case, is as (a) Section 3(b) which includes the "raising of livestock (and
follows: poultry)" in the definition of "Agricultural, Agricultural Enterprise or
Agricultural Activity."
On June 10, 1988, the President of the Philippines approved R.A. No. 6657,
which includes the raising of livestock, poultry and swine in its coverage (b) Section 11 which defines "commercial farms" as "private
(Rollo, p. 80). agricultural lands devoted to commercial, livestock, poultry and
swine raising . . ."
On January 2, 1989, the Secretary of Agrarian Reform promulgated the
Guidelines and Procedures Implementing Production and Profit Sharing as (c) Section 13 which calls upon petitioner to execute a production-
embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80). sharing plan.

On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules (d) Section 16(d) and 17 which vest on the Department of Agrarian
and Regulations implementing Section 11 of R.A. No. 6657 (Commercial Reform the authority to summarily determine the just compensation
Farms). (Rollo, p. 81). to be paid for lands covered by the Comprehensive Agrarian Reform
Law.
Luz Farms, petitioner in this case, is a corporation engaged in the livestock
and poultry business and together with others in the same business (e) Section 32 which spells out the production-sharing plan
allegedly stands to be adversely affected by the enforcement of Section mentioned in Section 13 —
3(b), Section 11, Section 13, Section 16(d) and 17 and Section 32 of R.A. ". . . (W)hereby three percent (3%) of the gross sales from the
No. 6657 otherwise known as Comprehensive Agrarian Reform Law and of production of such lands are distributed within sixty (60) days of the
the Guidelines and Procedures Implementing Production and Profit Sharing end of the fiscal year as compensation to regular and other
under R.A. No. 6657 promulgated on January 2, 1989 and the Rules and farmworkers in such lands over and above the compensation they
currently receive: Provided, That these individuals or entities realize
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gross sales in excess of five million pesos per annum unless the lands all over the country who use available space in their residence
DAR, upon proper application, determine a lower ceiling. for commercial livestock and raising purposes, under "contract-
growing arrangements," whereby processing corporations and other
In the event that the individual or entity realizes a profit, an
commercial livestock and poultry raisers (Rollo, p. 10). Lands
additional ten (10%) of the net profit after tax shall be distributed
support the buildings and other amenities attendant to the raising
to said regular and other farmworkers within ninety (90) days of the
of animals and birds. The use of land is incidental to but not the
end of the fiscal year . . ."
principal factor or consideration in productivity in this industry.
The main issue in this petition is the constitutionality of Sections 3(b), 11, Including backyard raisers, about 80% of those in commercial
13 and 32 of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of livestock and poultry production occupy five hectares or less. The
1988), insofar as the said law includes the raising of livestock, poultry and remaining 20% are mostly corporate farms (Rollo, p. 11).
swine in its coverage as well as the Implementing Rules and Guidelines
On the other hand, the public respondent argued that livestock and poultry
promulgated in accordance therewith.:-cralaw
raising is embraced in the term "agriculture" and the inclusion of such
The constitutional provision under consideration reads as follows: enterprise under Section 3(b) of R.A. 6657 is proper. He cited that Webster's
International Dictionary, Second Edition (1954), defines the following
ARTICLE XIII words:
x x x "Agriculture — the art or science of cultivating the ground and
AGRARIAN AND NATURAL RESOURCES REFORM raising and harvesting crops, often, including also, feeding, breeding
and management of livestock, tillage, husbandry, farming.
Section 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers, It includes farming, horticulture, forestry, dairying, sugarmaking . . .
who are landless, to own directly or collectively the lands they till Livestock — domestic animals used or raised on a farm, especially for profit.
or, in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and undertake Farm — a plot or tract of land devoted to the raising of domestic or other
the just distribution of all agricultural lands, subject to such priorities animals." (Rollo, pp. 82-83).
and reasonable retention limits as the Congress may prescribe,
The petition is impressed with merit.
taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. The question raised is one of constitutional construction. The primary task
In determining retention limits, the State shall respect the rights of in constitutional construction is to ascertain and thereafter assure the
small landowners. The State shall further provide incentives for realization of the purpose of the framers in the adoption of the Constitution
voluntary land-sharing. (J.M. Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).:
rd
x x x"
Ascertainment of the meaning of the provision of Constitution begins with
Luz Farms contended that it does not seek the nullification of R.A.
the language of the document itself. The words used in the Constitution are
6657 in its entirety. In fact, it acknowledges the correctness of the
to be given their ordinary meaning except where technical terms are
decision of this Court in the case of the Association of Small
employed in which case the significance thus attached to them prevails (J.M.
Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform
Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).
(G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that It is generally held that, in construing constitutional provisions which are
Congress in enacting the said law has transcended the mandate of ambiguous or of doubtful meaning, the courts may consider the debates in
the Constitution, in including land devoted to the raising of livestock, the constitutional convention as throwing light on the intent of the framers
poultry and swine in its coverage (Rollo, p. 131). Livestock or of the Constitution. It is true that the intent of the convention is not
poultry raising is not similar to crop or tree farming. Land is not the controlling by itself, but as its proceeding was preliminary to the adoption
primary resource in this undertaking and represents no more than by the people of the Constitution the understanding of the convention as to
five percent (5%) of the total investment of commercial livestock what was meant by the terms of the constitutional provision which was the
and poultry raisers. Indeed, there are many owners of residential subject of the deliberation, goes a long way toward explaining the
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understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 "Sa pangalawang katanungan ng Ginoo ay medyo hindi kami
SCRA 183 [1974]). nagkaunawaan. Ipinaaalam ko kay Commissioner Regalado na hindi
namin inilagay ang agricultural worker sa kadahilanang kasama rito
The transcripts of the deliberations of the Constitutional Commission of 1986
ang piggery, poultry at livestock workers. Ang inilagay namin dito
on the meaning of the word "agricultural," clearly show that it was never
ay farm worker kaya hindi kasama ang piggery, poultry at livestock
the intention of the framers of the Constitution to include livestock and
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
poultry industry in the coverage of the constitutionally-mandated agrarian
reform program of the Government. It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted to commercial livestock, poultry
The Committee adopted the definition of "agricultural land" as defined under
and swine raising" in the definition of "commercial farms" is invalid, to the
Section 166 of R.A. 3844, as laud devoted to any growth, including but not
extent that the aforecited agro-industrial activities are made to be covered
limited to crop lands, saltbeds, fishponds, idle and abandoned land (Record,
by the agrarian reform program of the State. There is simply no reason to
CONCOM, August 7, 1986, Vol. III, p. 11).
include livestock and poultry lands in the coverage of agrarian reform.
The intention of the Committee is to limit the application of the word (Rollo, p. 21).
"agriculture." Commissioner Jamir proposed to insert the word "ARABLE" to
Hence, there is merit in Luz Farms' argument that the requirement in
distinguish this kind of agricultural land from such lands as commercial and
Sections 13 and 32 of R.A. 6657 directing "corporate farms" which include
industrial lands and residential properties because all of them fall under the
livestock and poultry raisers to execute and implement "production-sharing
general classification of the word "agricultural". This proposal, however, was
plans" (pending final redistribution of their landholdings) whereby they are
not considered because the Committee contemplated that agricultural lands
called upon to distribute from three percent (3%) of their gross sales and
are limited to arable and suitable agricultural lands and therefore, do not
ten percent (10%) of their net profits to their workers as additional
include commercial, industrial and residential lands (Record, CONCOM,
compensation is unreasonable for being confiscatory, and therefore violative
August 7, 1986, Vol. III, p. 30).
of due process (Rollo, p. 21).:-cralaw
In the interpellation, then Commissioner Regalado (now a Supreme Court
It has been established that this Court will assume jurisdiction over a
Justice), posed several questions, among others, quoted as follows:
constitutional question only if it is shown that the essential requisites of a
x x x judicial inquiry into such a question are first satisfied. Thus, there must be
an actual case or controversy involving a conflict of legal rights susceptible
"Line 19 refers to genuine reform program founded on the primary of judicial determination, the constitutional question must have been
right of farmers and farmworkers. I wonder if it means that opportunely raised by the proper party, and the resolution of the question
leasehold tenancy is thereby proscribed under this provision is unavoidably necessary to the decision of the case itself (Association of
because it speaks of the primary right of farmers and farmworkers Small Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform,
to own directly or collectively the lands they till. As also mentioned G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744;
by Commissioner Tadeo, farmworkers include those who work in Manaay v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
piggeries and poultry projects.
However, despite the inhibitions pressing upon the Court when confronted
I was wondering whether I am wrong in my appreciation that if with constitutional issues, it will not hesitate to declare a law or act invalid
somebody puts up a piggery or a poultry project and for that when it is convinced that this must be done. In arriving at this conclusion,
purpose hires farmworkers therein, these farmworkers will its only criterion will be the Constitution and God as its conscience gives it
automatically have the right to own eventually, directly or ultimately in the light to probe its meaning and discover its purpose. Personal motives
or collectively, the land on which the piggeries and poultry projects and political considerations are irrelevancies that cannot influence its
were constructed. (Record, CONCOM, August 2, 1986, p. 618). decisions. Blandishment is as ineffectual as intimidation, for all the awesome
x x x power of the Congress and Executive, the Court will not hesitate "to make
the hammer fall heavily," where the acts of these departments, or of any
The questions were answered and explained in the statement of official, betray the people's will as expressed in the Constitution (Association
then Commissioner Tadeo, quoted as follows: of Small Landowners of the Philippines, Inc. v. Secretary of Agrarian Reform,
x x x G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744;
Manaay v. Juico, G.R. 79777, 14 July 1989).
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Thus, where the legislature or the executive acts beyond the scope of its THE COURT OF APPEALS, OFFICE OF THE PRESIDENT, and the
constitutional powers, it becomes the duty of the judiciary to declare what MUNICIPALITY OF BALIUAG, BULACAN,respondents.
the other branches of the government had assumed to do, as void. This is
the essence of judicial power conferred by the Constitution "(I)n one
Supreme Court and in such lower courts as may be established by law" (Art.
VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973
Constitution and which was adopted as part of the Freedom Constitution, DECISION
and Article VIII, Section 1 of the 1987 Constitution) and which power this
Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208
[1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections
3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the inclusion of the raising Tinga, J.:
of livestock, poultry and swine in its coverage as well as the Implementing
Rules and Guidelines promulgated in accordance therewith, are hereby On appeal via a petition for review on certiorari under Rule 45 of the 1997 Rules of
DECLARED null and void for being unconstitutional and the writ of Civil Procedure are the Decision1 and Resolution2 of the Court of Appeals in CA-G.R.
preliminary injunction issued is hereby MADE permanent. SP No. 55710. The Decision affirmed the Resolution dated 4 October 1999 of the
SO ORDERED. Office of the President dismissing petitioners' appeal from the Order of the Secretary
of Agrarian Reform declaring that the disputed property cannot be placed under the
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, coverage of the agrarian reform program or the Operation Land Transfer.
Gancayco, Padilla, Bidin, Griño-Aquino, Medialdea and Regalado, JJ.,
concur. The following factual antecedents are matters of record.
Feliciano, J., is on leave.
Petitioners Froilan De Guzman, Angel Marcelo and Nicasio Magbitang were among
the tenants of a parcel of land situated at Barangay Pagala, Baliuag, Bulacan. The
land, measuring six (6) hectares, was formerly owned by the Vergel De Dios family.
Sometime in 1979, respondent Municipality of Baliuag, Bulacan (municipality) sought
the expropriation of the land before the now defunct Court of Agrarian Relations.
During the pendency of the expropriation proceedings, the municipality and
petitioners entered into a compromise agreement, whereby petitioners irrevocably
withdrew their opposition to the expropriation of the land in consideration of the
payment of a disturbance compensation of P25,000.00 per hectare or P2.50 per
square meter. Petitioners also waived "all claims and demands" against the
municipality. The Court of Agrarian Relations approved said compromise agreement
in its decisions dated 16 April 1979 and 9 August 1979.3

From the records, it can be gathered that the municipality eventually acquired
ownership of the land through expropriation but allowed petitioners to continue
THIRD DIVISION cultivating their lots pending the construction of the Baliuag Wholesale Complex
Market. For this arrangement, petitioners remitted rentals to the municipal treasurer.
Despite the lapse of several years, construction of the market did not push through.
G.R. No. 156965 October 12, 2006 This prompted petitioners, who had continually occupied and cultivated the land, to
file in 1996 a petition with the Municipal Agrarian Reform Office (MARO) of Baliuag,
FROILAN DE GUZMAN, ANGEL MARCELO and NICASIO praying that the land be placed under the Operation Land Transfer (OLT) in
MAGBITANG, petitioners, accordance with Presidential Decree (P.D.) No. 27.4
vs.
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Following the filing of their petition for CARP coverage before the MARO, petitioners Hence, the instant petition, imputing the following errors to the Court of Appeals:
filed a complaint on 13 May 1997 with the Department of Agrarian Reform
Adjudication Board (DARAB) against the municipality. In their complaint docketed as I.
DARAB Case No. 03-02-5054'97, petitioners prayed for the issuance of a preliminary
injunction or temporary restraining order to secure their peaceful possession over the
land. The Provincial Adjudicator rendered judgment in favor of petitioners on 17 July WITH ALL DUE RESPECT, THE COURT OF APPEALS COMMITTED
1997. The dispositive portion of the decision reads: GRAVE AND MANIFEST ERROR IN LAW WHEN IT FAILED TO
CONSIDER THAT THE SUBJECT LANDHOLDING SHOULD HAVE BEEN
COVERED BY OPERATION LAND TRANSFER PURSUANT TO P.D. NO.
WHEREFORE, premises considered, the Board finds the plaintiffs a [sic] 27 DUE TO THE FAILURE OF THE LANDOWNER TO CARRY OUT ITS
bona-fide farmer[-]beneficiaries of agrarian reform[.] [A]ccordingly, judgment CONVERSION FROM AGRICULTURAL LAND FOR A LONG PERIOD OF
is hereby rendered as follows: TIME.

1. Directing the the [sic] respondent, Municipality of Baliuag, Bulacan[,] II.


represented by Honorable Mayor Edilberto Tengco and all other persons
acting in their behalf to permanently cease and desist from dumping garbage
in the premises in question; THE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT
UPHOLD (sic) THE RECLASSIFICATION OF THE SUBJECT
LANDHOLDING.
2. Directing the respondent to maintain petitioners in peaceful possession
over the disputed property.
III.
SO ORDERED.5
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT DISREGARDED THE PROVISIONS OF THE O.P.
On 6 January 1997, the Regional Director of the Department of Agrarian Reform ADMINISTRATIVE ORDER NO. 20 SERIES OF 1992 WHICH CLEARLY
(DAR) issued an order granting the petition and declaring the land as covered by PROVIDES THE NON NEGOTIABILITY OF IRRIGATED PRIME
OLT.6 The municipality moved for its reconsideration in vain. Following the denial of AGRICULTURAL LANDS TO NON-AGRICULTURAL PURPOSES.9
its motion for reconsideration, the municipality elevated the matter to the DAR
Secretary who, in his Order dated 8 August 1997, reversed the Order of 6 January
1997 of the Regional Director.7 Petitioners, aggrieved this time, filed an appeal with Essentially, the main issue to be resolved is whether the subject land can be
the Office of the President. On 1 July 1999, Executive Secretary Ronaldo B. Zamora, reclassified to agricultural after the purpose of its conversion to a non-agricultural land
by authority of the President, dismissed petitioners' appeal and affirmed the order of had not materialized.
the DAR Secretary.8
Petitioners contend that despite the conversion of the land for a commercial purpose,
Undaunted, petitioners filed a petition for review with the Court of Appeals, which they have remained tenants of the land devoting it for agricultural production. Though
prayed for the reversal of the Order of 1 July 1999 issued by the Office of the the earlier tenancy relationship had been terminated upon the payment of disturbance
President on the grounds that the land remained agricultural and that the Office of the compensation pursuant to the 1979 compromise agreement, petitioners posit that a
President erred in relying upon the certification issued by the Housing and Land Use tenancy relationship was created anew between them and the municipality when the
Regulatory Board (HLURB) classifying the land as commercial. They also argued that latter allowed petitioners to cultivate the land after the expropriation proceeding.
under the provisions of Administrative Order (A.O.) No. 20, series of 1992, the
conversion of the land for non-agricultural purposes was disallowed. The petition has no merit.

On 30 January, 2002, the Court of Appeals rendered the assailed Decision, Under Section 3(c) of Republic Act (R.A.) No. 6657, otherwise known as the
dismissing petitioners' appeal. Upholding the non-agricultural classification of the Comprehensive Agrarian Reform Law (CARL), an agricultural land refers to land
land, the Court of Appeals ruled that the land could no longer be subject of the devoted to agricultural activity as defined therein and not classified as mineral, forest,
comprehensive agrarian reform law (CARL). The Court of Appeals also denied residential, commercial or industrial land. The deliberations of the Constitutional
petitioners' motion for reconsideration in the assailed Resolution dated January 20, Commission confirm this limitation. "Agricultural lands" are only those lands which are
2003. "arable and suitable agricultural lands" and "do not include commercial, industrial and
residential lands."10
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In Natalia Realty, Inc. vs. Department of Agrarian Reform,11 it was held that lands not maluwag sa kanilang kalooban, kung kaya't iminungkahi niya na gumawa ng
devoted to agricultural activity are outside the coverage of CARL including lands isang nakasulat na kasunduan na ang nakasaad ay kusang-loob silang aalis
previously converted to non-agricultural uses prior to the effectivity of CARL by sa nasabing lupa pagdating ng panahon na ito ay kailanganin na ng
government agencies other than the DAR. This rule has been reiterated in a number Pamahalaang Bayan.15
of subsequent cases. Despite claims that the areas have been devoted for
agricultural production, the Court has upheld the "non-agricultural" classification made The aforequoted minutes clearly show that petitioners' use and possession of the land
by the NHA over housing and resettlements projects,12 zoning ordinances passed by was by mere tolerance of the municipality and subject to the condition that petitioners
local government units classifying residential areas,13 and certifications over would voluntarily vacate the land when the need would arise. In the same minutes,
watershed areas issued by the Department of Environment and Natural Resources the Sanggunian resolved to authorize then Mayor Reynaldo S. del Rosario to enter
(DENR).14 into an agreement in writing with petitioners concerning the
latter's temporary cultivation of the land as hired labor.
The DAR itself has recognized the prospective application of R.A. No. 6657, insofar
as it provides under Section 3(c) thereof that lands classified as non-agricultural prior As discussed earlier, the land had ceased to be classified as agricultural when the
to the effectivity of the CARL are not covered by the CARL. Thus, DAR Administrative municipality extended petitioners' occupation of the land. After the municipality
Order No. 1, series of 1990 provides: acquired ownership over the land through expropriation and passed the ordinance
converting said land into a commercial area, any transaction entered into by the
Agricultural land refers to those devoted to agricultural activity as defined in municipality involving the land was governed by the applicable civil law in relation to
R.A. [No.] 6657 and not classified as mineral or forest by the Department of laws on local government. At this point, agrarian laws no longer governed the
Environment and Natural Resources (DENR) and its predecessor agencies, relationship between petitioners and the municipality. While it was not established
and not classified in town plans and zoning ordinances as approved by the whether the relationship between petitioners and the municipality was that of a lessor
Housing Land Use Regulatory Board (HLURB) and its preceding competent and lessee or that of an employer and laborer, as the supposed written agreement
authorities prior to 15 June 1988 for residential, commercial or industrial use. was not offered in evidence, the fact remains that the subject land had already been
(Emphasis supplied.} identified as commercial in the zoning ordinance.

That the subject land had been reclassified from agricultural to non-agricultural is not Certainly, petitioners' occupation of the land, made possible as it was by the tolerance
disputed. The records reveal that as early as 1980, the municipality had passed a of the municipality, was subject to its peremptory right to terminate. As absolute
zoning ordinance which identified the subject land as the site of the wholesale market owner of the land, the municipality is entitled to devote the land for purposes it deems
complex. As per certification issued by the HLURB, the land is within the zoning plan appropriate.
approved by the National Coordinating Council for Town Planning, Housing and
Zoning. It is noteworthy that even prior to its expropriation and reclassification, the land was
never placed under the coverage of the agrarian reform program. Although it appears
Petitioners also theorize that they earned a vested right over the land when a tenancy that petitioners had been tilling the land as tenants of the Vergel De Dios family, the
relationship was established anew between them and the municipality subsequent to municipality's predecessor-in-interest, the records do not show that petitioners had
the latter's acquisition of the land. In support of this theory, petitioners cite minutes of applied for coverage of the land under the agrarian reform program. Before a claimant
meetings and resolutions passed by the municipality's Sanggunian, purportedly becomes a qualified beneficiary of agrarian reform, the administrative process for
indicating the municipality's recognition of their status as tenants of the subject coverage under the CARP must be initiated. The mere fact of cultivating an
landholding. agricultural land does not ipso jure vest ownership right in favor of the tiller. Since
petitioners had not applied for CARP coverage prior to the reclassification of the land
Petitioners' theory does not persuade the Court. to commercial, their occupation by mere tolerance cannot ripen into absolute
ownership.
A segment of the minutes of the meeting of the municipality's Sanggunian dated 27
May 1988, which petitioners cite to bolster their theory, is quoted below: Petitioners further argue that the municipality's failure to realize the commercial
project operates to reinstate the original status of the land as agricultural. In support
of this theory, petitioners cite Section 36 (1) of R.A. No. 3844, or the Agriculture Land
Tumindig din at namahayag ang ating Punong Bayan Kgg. Reynaldo S. del Reform Code, unaware that the provision had been amended by R.A. 6389, entitled,
Rosario at sinabing sa kasulukuyan ay hindi pa naman kailangan ng "An Act Amending Republic Act Numbered Thirty Eight Hundred and Forty Four, As
Pamahalaang Bayan ang nasabing lupa ngunit kung ito ay kakailangan na
ay kinakailangang umalis sila dito ng mahinusay, walang pasubali at
7

Amended, Otherwise Known As the Agricultural Land Reform Code and For Other The amendment is the Legislature's recognition that the optimal use of some lands
Purposes." may not necessarily be for agriculture. Thus, discretion is vested on the appropriate
government agencies to determine the suitability of a land for residential, commercial,
Before its amendment, Section 36 (1), R.A. No. 3844 provided: industrial or other purposes. With the passage of the CARL, the conversion of
agricultural lands to non-agricultural uses was retained and the imposition on the
landowner to implement within a time frame the proposed non-agricultural use of the
Sec. 36. Possession of Landholding; Exceptions.—Notwithstanding any land was done away with.
agreement as to the period or future surrender, of the land, an agricultural
lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a Moreover, in Pasong Bayabas Farmers Association, Inc. v. Court of Appeals,17 the
judgment that is final and executory if after due hearing it is shown that: Court declared categorically that the failure of the landowner therein to complete the
housing project did not have the effect of reverting the property to its classification as
agricultural land, although the order of conversion issued by the then Minister of
(1) The agricultural lessor-owner or a member of his immediate family will Agrarian Reform obliged the landowner to commence the physical development of
personally cultivate the landholding or will convert the landholding, if suitably the housing project within one year from receipt of the order of conversion. 18 In said
located, into residential, factory, hospital or school site or other useful non- case, a vast tract of land claimed to be cultivated by its tenants formed part of the
agricultural purposes: Provided, That the agricultural lessee shall be entitled subdivision plan of a housing project approved by the National Planning Commission
to disturbance compensation equivalent to five years rental on his and Municipal Council of Carmona and subsequently declared by the Provincial
landholding in addition to his rights under Sections twenty-five and thirty- Board of Cavite as composite of the industrial areas of Carmona, Dasmariñas, Silang
four, except when the land owned and leased by the agricultural lessor, is and Trece Martirez. Because the reclassification of the property by the Municipal
not more than five hectares, in which case instead of disturbance Council of Carmona to non-agricultural land took place before the effectivity of the
compensation the lessee may be entitled to an advanced notice of at least CARL, the Court held that Section 65 of R.A. No. 6657 cannot be applied
one agricultural year before ejectment proceedings are filed against retroactively.19
him: Provided, further, That should the landholder not cultivate the land
himself for three years or fail to substantially carry out such conversion
within one year after the dispossession of the tenant, it shall be presumed More importantly, the Court in Pasong Bayabas recognized the power of local
that he acted in bad faith and the tenant shall have the right to demand government units to adopt zoning ordinances, citing Section 3 of R.A. No. 2264, 20 to
possession of the land and recover damages for any loss incurred by him wit:
because of said dispossessions.
Section 3 of Rep. Act No. 2264, amending the Local Government Code,
With the enactment of the amendatory law, the condition imposed on the landowner specifically empowers municipal and/or city councils to adopt zoning and
to implement the conversion of the agricultural land to a non-agricultural purpose subdivision ordinances or regulations in consultation with the National
within a certain period was deleted. Section 36 (1), R.A. No. 3844, as amended, now Planning Commission. A zoning ordinance prescribes, defines, and
reads: apportions a given political subdivision into specific land uses as present and
future projection of needs. The power of the local government to convert or
reclassify lands to residential lands to non-agricultural lands reclassified is
Sec. 36. Possession of Landholding; Exceptions.– Notwithstanding any not subject to the approval of the Department of Agrarian Reform. Section
agreement as to the period or future surrender, of the land, an agricultural 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to
lessee shall continue in the enjoyment and possession of his landholding applications by the landlord or the beneficiary for the conversion of lands
except when his dispossession has been authorized by the Court in a previously placed under agrarian reform law after the lapse of five years
judgment that is final and executory if after due hearing it is shown that: from its award. It does not apply to agricultural lands already converted as
residential lands prior to the passage of Rep. Act No. 6657.21
(1) The landholding is declared by the department head upon
recommendation of the National Planning Commission to be suited for Thus, the zoning ordinance passed by the municipality sometime in 1980
residential, commercial, industrial or some other urban purposes: Provided, reclassifying the subject land as commercial and future site of a market complex
That the agricultural lessee shall be entitled to disturbance compensation operated to take away the "agricultural" status of the subject property. Subsequent
equivalent to five times the average of gross harvests on his landholding events cited by petitioners such as their continuous tillage of the land and the non-
during the last five preceding calendar years; commencement of the construction of the market complex did not strip the land of its
classification as commercial.
x x x x16
8

Petitioners' reliance on the provisions of A.O. No. 20, series of 1992, issued by then G.R. No. 79310 July 14, 1989
President Fidel Ramos is misplaced. A.O. No. 20, which sets forth the guidelines to
be observed by local government units and government agencies on agricultural land ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS
use conversion, cannot be applied to the subject land for the reason that the land had JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS'
already been classified as commercial long before its issuance. Indeed, A.O. No. 20 COMMITTEE, INC., Victorias Mill District, Victorias, Negros
cannot be applied retroactively. Occidental, petitioners,
vs.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
and Resolution of the Court of Appeals in CA-G.R. SP No. 55710 are AFFIRMED. COUNCIL, respondents.
Costs against petitioners.
G.R. No. 79744 July 14, 1989
SO ORDERED.
INOCENTES PABICO, petitioner,
Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ., concur. vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE
OF THE PRESIDENT, and Messrs. SALVADOR TALENTO, JAIME ABOGADO,
CONRADO AVANCENA and ROBERTO TAAY, respondents.

G.R. No. 79777 July 14, 1989

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,


vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK
OF THE PHILIPPINES, respondents.

CRUZ, J.:

EN BANC In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor. The
G.R. No. 78742 July 14, 1989 two wrestled mightily and Hercules flung his adversary to the ground thinking him
dead, but Antaeus rose even stronger to resume their struggle. This happened
several times to Hercules' increasing amazement. Finally, as they continued
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never
D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. die as long as any part of his body was touching his Mother Earth. Thus forewarned,
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I. Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil, and
LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, crushed him to death.
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J. PRESTOSA,
EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch
FERRER, petitioners, even the powerful Antaeus weakened and died.
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent. The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus need the
sustaining strength of the precious earth to stay alive.
9

"Land for the Landless" is a slogan that underscores the acute imbalance in the Presidential Proclamation No. 131, instituting a comprehensive agrarian reform
distribution of this precious resource among our people. But it is more than a slogan. program (CARP), and E.O. No. 229, providing the mechanics for its implementation.
Through the brooding centuries, it has become a battle-cry dramatizing the
increasingly urgent demand of the dispossessed among us for a plot of earth as their Subsequently, with its formal organization, the revived Congress of the Philippines
place in the sun. took over legislative power from the President and started its own deliberations,
including extensive public hearings, on the improvement of the interests of farmers.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice The result, after almost a year of spirited debate, was the enactment of R.A. No.
to "insure the well-being and economic security of all the people," 1 especially the less 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, which
privileged. In 1973, the new Constitution affirmed this goal adding specifically that President Aquino signed on June 10, 1988. This law, while considerably changing the
"the State shall regulate the acquisition, ownership, use, enjoyment and disposition of earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
private property and equitably diffuse property ownership and profits." 2 Significantly, they are not inconsistent with its provisions. 4
there was also the specific injunction to "formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil." 3 The above-captioned cases have been consolidated because they involve common
legal questions, including serious challenges to the constitutionality of the several
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it measures mentioned above. They will be the subject of one common discussion and
also adopted one whole and separate Article XIII on Social Justice and Human resolution, The different antecedents of each case will require separate treatment,
Rights, containing grandiose but undoubtedly sincere provisions for the uplift of the however, and will first be explained hereunder.
common people. These include a call in the following words for the adoption by the
State of an agrarian reform program: G.R. No. 79777

SEC. 4. The State shall, by law, undertake an agrarian reform Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228
program founded on the right of farmers and regular farmworkers, and 229, and R.A. No. 6657.
who are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the The subjects of this petition are a 9-hectare riceland worked by four tenants and
just distribution of all agricultural lands, subject to such priorities owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by
and reasonable retention limits as the Congress may prescribe, four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were
taking into account ecological, developmental, or equity declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D.
considerations and subject to the payment of just compensation. In No. 27.
determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives for The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds
voluntary land-sharing. inter alia of separation of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use without just
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform compensation.
Code, had already been enacted by the Congress of the Philippines on August 8,
1963, in line with the above-stated principles. This was substantially superseded They contend that President Aquino usurped legislative power when she promulgated
almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972, E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section 4,
along with martial law, to provide for the compulsory acquisition of private lands for of the Constitution, for failure to provide for retention limits for small landowners.
distribution among tenant-farmers and to specify maximum retention limits for Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a
landowners. valid appropriation.

The people power revolution of 1986 did not change and indeed even energized the In connection with the determination of just compensation, the petitioners argue that
thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino the same may be made only by a court of justice and not by the President of the
issued E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. Philippines. They invoke the recent cases of EPZA v. Dulay 5 andManotok v. National
No. 27 and providing for the valuation of still unvalued lands covered by the decree as Food Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights
well as the manner of their payment. This was followed on July 22, 1987 by is payable in money or in cash and not in the form of bonds or other things of value.
10

In considering the rentals as advance payment on the land, the executive order also The petitioners herein are landowners and sugar planters in the Victorias Mill District,
deprives the petitioners of their property rights as protected by due process. The Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an
equal protection clause is also violated because the order places the burden of organization composed of 1,400 planter-members. This petition seeks to prohibit the
solving the agrarian problems on the owners only of agricultural lands. No similar implementation of Proc. No. 131 and E.O. No. 229.
obligation is imposed on the owners of other properties.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to Program as decreed by the Constitution belongs to Congress and not the President.
be the owners of the lands occupied by them, E.O. No. 228 ignored judicial Although they agree that the President could exercise legislative power until the
prerogatives and so violated due process. Worse, the measure would not solve the Congress was convened, she could do so only to enact emergency measures during
agrarian problem because even the small farmers are deprived of their lands and the the transition period. At that, even assuming that the interim legislative power of the
retention rights guaranteed by the Constitution. President was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to
be annulled for violating the constitutional provisions on just compensation, due
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been process, and equal protection.
upheld in the earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and
Association of Rice and Corn Producers of the Philippines, Inc. v. The National Land They also argue that under Section 2 of Proc. No. 131 which provides:
Reform Council. 9 The determination of just compensation by the executive
authorities conformably to the formula prescribed under the questioned order is at Agrarian Reform Fund.-There is hereby created a special fund, to be known as the
best initial or preliminary only. It does not foreclose judicial intervention whenever Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
sought or warranted. At any rate, the challenge to the order is premature because no (P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian
valuation of their property has as yet been made by the Department of Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts of the
Reform. The petitioners are also not proper parties because the lands owned by them sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
do not exceed the maximum retention limit of 7 hectares. wealth received through the Presidential Commission on Good Government and such
other sources as government may deem appropriate. The amounts collected and
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not accruing to this special fund shall be considered automatically appropriated for the
provide for retention limits on tenanted lands and that in any event their petition is a purpose authorized in this Proclamation the amount appropriated is in futuro, not in
class suit brought in behalf of landowners with landholdings below 24 hectares. They esse. The money needed to cover the cost of the contemplated expropriation has yet
maintain that the determination of just compensation by the administrative authorities to be raised and cannot be appropriated at this time.
is a final ascertainment. As for the cases invoked by the public respondent, the
constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was Furthermore, they contend that taking must be simultaneous with payment of just
decided in Gonzales was the validity of the imposition of martial law. compensation as it is traditionally understood, i.e., with money and in full, but no such
payment is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6,
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, thereof provides that the Land Bank of the Philippines "shall compensate the
E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly repealed by landowner in an amount to be established by the government, which shall be based
R.A. No. 6657. Nevertheless, this statute should itself also be declared on the owner's declaration of current fair market value as provided in Section 4
unconstitutional because it suffers from substantially the same infirmities as the hereof, but subject to certain controls to be defined and promulgated by the
earlier measures. Presidential Agrarian Reform Council." This compensation may not be paid fully in
money but in any of several modes that may consist of part cash and part bond, with
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente interest, maturing periodically, or direct payment in cash or bond as may be mutually
Cruz, owner of a 1. 83- hectare land, who complained that the DAR was insisting on agreed upon by the beneficiary and the landowner or as may be prescribed or
the implementation of P.D. No. 27 and E.O. No. 228 despite a compromise approved by the PARC.
agreement he had reached with his tenant on the payment of rentals. In a subsequent
motion dated April 10, 1989, he adopted the allegations in the basic amended petition The petitioners also argue that in the issuance of the two measures, no effort was
that the above- mentioned enactments have been impliedly repealed by R.A. No. made to make a careful study of the sugar planters' situation. There is no tenancy
6657. problem in the sugar areas that can justify the application of the CARP to them. To
the extent that the sugar planters have been lumped in the same legislation with other
G.R. No. 79310 farmers, although they are a separate group with problems exclusively their own, their
right to equal protection has been violated.
11

A motion for intervention was filed on August 27,1987 by the National Federation of On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own
Sugarcane Planters (NASP) which claims a membership of at least 20,000 individual behalf, assailing the constitutionality of E.O. No. 229. In addition to the arguments
sugar planters all over the country. On September 10, 1987, another motion for already raised, Serrano contends that the measure is unconstitutional because:
intervention was filed, this time by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the Court. (1) Only public lands should be included in the CARP;

NASP alleges that President Aquino had no authority to fund the Agrarian Reform (2) E.O. No. 229 embraces more than one subject which is not
Program and that, in any event, the appropriation is invalid because of uncertainty in expressed in the title;
the amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O.
No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount. This is not allowed. (3) The power of the President to legislate was terminated on July
Furthermore, the stated initial amount has not been certified to by the National 2, 1987; and
Treasurer as actually available.
(4) The appropriation of a P50 billion special fund from the National
Two additional arguments are made by Barcelona, to wit, the failure to establish by Treasury did not originate from the House of Representatives.
clear and convincing evidence the necessity for the exercise of the powers of eminent
domain, and the violation of the fundamental right to own property. G.R. No. 79744

The petitioners also decry the penalty for non-registration of the lands, which is the The petitioner alleges that the then Secretary of Department of Agrarian Reform, in
expropriation of the said land for an amount equal to the government assessor's violation of due process and the requirement for just compensation, placed his
valuation of the land for tax purposes. On the other hand, if the landowner declares landholding under the coverage of Operation Land Transfer. Certificates of Land
his own valuation he is unjustly required to immediately pay the corresponding taxes Transfer were subsequently issued to the private respondents, who then refused
on the land, in violation of the uniformity rule. payment of lease rentals to him.

In his consolidated Comment, the Solicitor General first invokes the presumption of On September 3, 1986, the petitioner protested the erroneous inclusion of his small
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the landholding under Operation Land transfer and asked for the recall and cancellation
necessity for the expropriation as explained in the "whereas" clauses of the of the Certificates of Land Transfer in the name of the private respondents. He claims
Proclamation and submits that, contrary to the petitioner's contention, a pilot project to that on December 24, 1986, his petition was denied without hearing. On February 17,
determine the feasibility of CARP and a general survey on the people's opinion 1987, he filed a motion for reconsideration, which had not been acted upon when
thereon are not indispensable prerequisites to its promulgation. E.O. Nos. 228 and 229 were issued. These orders rendered his motion moot and
academic because they directly effected the transfer of his land to the private
On the alleged violation of the equal protection clause, the sugar planters have failed respondents.
to show that they belong to a different class and should be differently treated. The
Comment also suggests the possibility of Congress first distributing public agricultural The petitioner now argues that:
lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature. (1) E.O. Nos. 228 and 229 were invalidly issued by the President of
the Philippines.
The public respondent also points out that the constitutional prohibition is against the
payment of public money without the corresponding appropriation. There is no rule (2) The said executive orders are violative of the constitutional
that only money already in existence can be the subject of an appropriation law. provision that no private property shall be taken without due
Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although process or just compensation.
denominated as an initial amount, is actually the maximum sum appropriated. The
word "initial" simply means that additional amounts may be appropriated later when
necessary. (3) The petitioner is denied the right of maximum retention provided
for under the 1987 Constitution.
12

The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
Congress convened is anomalous and arbitrary, besides violating the doctrine of
separation of powers. The legislative power granted to the President under the No tenant-farmer in agricultural lands primarily devoted to rice and
Transitory Provisions refers only to emergency measures that may be promulgated in corn shall be ejected or removed from his farmholding until such
the proper exercise of the police power. time as the respective rights of the tenant- farmers and the
landowner shall have been determined in accordance with the rules
The petitioner also invokes his rights not to be deprived of his property without due and regulations implementing P.D. No. 27.
process of law and to the retention of his small parcels of riceholding as guaranteed
under Article XIII, Section 4 of the Constitution. He likewise argues that, besides The petitioners claim they cannot eject their tenants and so are unable to enjoy their
denying him just compensation for his land, the provisions of E.O. No. 228 declaring right of retention because the Department of Agrarian Reform has so far not issued
that: the implementing rules required under the above-quoted decree. They therefore ask
the Court for a writ of mandamus to compel the respondent to issue the said rules.
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the In his Comment, the public respondent argues that P.D. No. 27 has been amended
land. by LOI 474 removing any right of retention from persons who own other agricultural
lands of more than 7 hectares in aggregate area or lands used for residential,
is an unconstitutional taking of a vested property right. It is also his contention that the commercial, industrial or other purposes from which they derive adequate income for
inclusion of even small landowners in the program along with other landowners with their family. And even assuming that the petitioners do not fall under its terms, the
lands consisting of seven hectares or more is undemocratic. regulations implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small
In his Comment, the Solicitor General submits that the petition is premature because Landowners, with an accompanying Retention Guide Table), Memorandum Circular
the motion for reconsideration filed with the Minister of Agrarian Reform is still No. 11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474),
unresolved. As for the validity of the issuance of E.O. Nos. 228 and 229, he argues Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines
that they were enacted pursuant to Section 6, Article XVIII of the Transitory on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Provisions of the 1987 Constitution which reads: Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to
The incumbent president shall continue to exercise legislative powers until the first file the corresponding applications for retention under these measures, the petitioners
Congress is convened. are now barred from invoking this right.

On the issue of just compensation, his position is that when P.D. No. 27 was The public respondent also stresses that the petitioners have prematurely initiated
promulgated on October 21. 1972, the tenant-farmer of agricultural land was deemed this case notwithstanding the pendency of their appeal to the President of the
the owner of the land he was tilling. The leasehold rentals paid after that date should Philippines. Moreover, the issuance of the implementing rules, assuming this has not
therefore be considered amortization payments. yet been done, involves the exercise of discretion which cannot be controlled through
the writ of mandamus. This is especially true if this function is entrusted, as in this
In his Reply to the public respondents, the petitioner maintains that the motion he filed case, to a separate department of the government.
was resolved on December 14, 1987. An appeal to the Office of the President would
be useless with the promulgation of E.O. Nos. 228 and 229, which in effect In their Reply, the petitioners insist that the above-cited measures are not applicable
sanctioned the validity of the public respondent's acts. to them because they do not own more than seven hectares of agricultural land.
Moreover, assuming arguendo that the rules were intended to cover them also, the
G.R. No. 78742 said measures are nevertheless not in force because they have not been published
as required by law and the ruling of this Court in Tanada v. Tuvera.10 As for LOI 474,
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to the same is ineffective for the additional reason that a mere letter of instruction could
owners of rice and corn lands not exceeding seven hectares as long as they are not have repealed the presidential decree.
cultivating or intend to cultivate the same. Their respective lands do not exceed the
statutory limit but are occupied by tenants who are actually cultivating such lands. I
13

Although holding neither purse nor sword and so regarded as the weakest of the give it the light to probe its meaning and discover its purpose. Personal motives and
three departments of the government, the judiciary is nonetheless vested with the political considerations are irrelevancies that cannot influence its decision.
power to annul the acts of either the legislative or the executive or of both when not Blandishment is as ineffectual as intimidation.
conformable to the fundamental law. This is the reason for what some quarters call
the doctrine of judicial supremacy. Even so, this power is not lightly assumed or For all the awesome power of the Congress and the Executive, the Court will not
readily exercised. The doctrine of separation of powers imposes upon the courts a hesitate to "make the hammer fall, and heavily," to use Justice Laurel's pithy
proper restraint, born of the nature of their functions and of their respect for the other language, where the acts of these departments, or of any public official, betray the
departments, in striking down the acts of the legislative and the executive as people's will as expressed in the Constitution.
unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to
sustain. The theory is that before the act was done or the law was enacted, earnest
studies were made by Congress or the President, or both, to insure that the It need only be added, to borrow again the words of Justice Laurel, that —
Constitution would not be breached.
... when the judiciary mediates to allocate constitutional boundaries,
In addition, the Constitution itself lays down stringent conditions for a declaration of it does not assert any superiority over the other departments; it
unconstitutionality, requiring therefor the concurrence of a majority of the members of does not in reality nullify or invalidate an act of the Legislature, but
the Supreme Court who took part in the deliberations and voted on the issue during only asserts the solemn and sacred obligation assigned to it by the
their session en banc.11 And as established by judge made doctrine, the Court will Constitution to determine conflicting claims of authority under the
assume jurisdiction over a constitutional question only if it is shown that the essential Constitution and to establish for the parties in an actual controversy
requisites of a judicial inquiry into such a question are first satisfied. Thus, there must the rights which that instrument secures and guarantees to them.
be an actual case or controversy involving a conflict of legal rights susceptible of This is in truth all that is involved in what is termed "judicial
judicial determination, the constitutional question must have been opportunely raised supremacy" which properly is the power of judicial review under the
by the proper party, and the resolution of the question is unavoidably necessary to the Constitution. 16
decision of the case itself. 12
The cases before us categorically raise constitutional questions that this Court must
With particular regard to the requirement of proper party as applied in the cases categorically resolve. And so we shall.
before us, we hold that the same is satisfied by the petitioners and intervenors
because each of them has sustained or is in danger of sustaining an immediate injury II
as a result of the acts or measures complained of. 13 And even if, strictly speaking,
they are not covered by the definition, it is still within the wide discretion of the Court We proceed first to the examination of the preliminary issues before resolving the
to waive the requirement and so remove the impediment to its addressing and more serious challenges to the constitutionality of the several measures involved in
resolving the serious constitutional questions raised. these petitions.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers
to question the constitutionality of several executive orders issued by President under martial law has already been sustained in Gonzales v. Estrella and we find no
Quirino although they were invoking only an indirect and general interest shared in reason to modify or reverse it on that issue. As for the power of President Aquino to
common with the public. The Court dismissed the objection that they were not proper promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized
parties and ruled that "the transcendental importance to the public of these cases under Section 6 of the Transitory Provisions of the 1987 Constitution, quoted above.
demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure." We have since then applied this exception in many other
cases. 15 The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power
from her. They are not "midnight" enactments intended to pre-empt the legislature
The other above-mentioned requisites have also been met in the present petitions. because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e.,
Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it
In must be stressed that despite the inhibitions pressing upon the Court when correct to say that these measures ceased to be valid when she lost her legislative
confronted with constitutional issues like the ones now before it, it will not hesitate to power for, like any statute, they continue to be in force unless modified or repealed by
declare a law or act invalid when it is convinced that this must be done. In arriving at subsequent law or declared invalid by the courts. A statute does not ipso
this conclusion, its only criterion will be the Constitution as God and its conscience facto become inoperative simply because of the dissolution of the legislature that
14

enacted it. By the same token, President Aquino's loss of legislative power did not compulsory heirs who still own the original homestead at the time of
have the effect of invalidating all the measures enacted by her when and as long as the approval of this Act shall retain the same areas as long as they
she possessed it. continue to cultivate said homestead.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact The argument that E.O. No. 229 violates the constitutional requirement that a bill shall
substantially affirmed the challenged measures and has specifically provided that have only one subject, to be expressed in its title, deserves only short attention. It is
they shall be suppletory to R.A. No. 6657 whenever not inconsistent with its settled that the title of the bill does not have to be a catalogue of its contents and will
provisions. 17 Indeed, some portions of the said measures, like the creation of the P50 suffice if the matters embodied in the text are relevant to each other and may be
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, inferred from the title. 20
have been incorporated by reference in the CARP Law. 18
The Court wryly observes that during the past dictatorship, every presidential
That fund, as earlier noted, is itself being questioned on the ground that it does not issuance, by whatever name it was called, had the force and effect of law because it
conform to the requirements of a valid appropriation as specified in the Constitution. came from President Marcos. Such are the ways of despots. Hence, it is futile to
Clearly, however, Proc. No. 131 is not an appropriation measure even if it does argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed
provide for the creation of said fund, for that is not its principal purpose. An P.D. No. 27 because the former was only a letter of instruction. The important thing is
appropriation law is one the primary and specific purpose of which is to authorize the that it was issued by President Marcos, whose word was law during that time.
release of public funds from the treasury. 19 The creation of the fund is only incidental
to the main objective of the proclamation, which is agrarian reform. But for all their peremptoriness, these issuances from the President Marcos still had
to comply with the requirement for publication as this Court held in Tanada v.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 Tuvera. 21 Hence, unless published in the Official Gazette in accordance with Article 2
and Section 25(4) of Article VI, are not applicable. With particular reference to Section of the Civil Code, they could not have any force and effect if they were among those
24, this obviously could not have been complied with for the simple reason that the enactments successfully challenged in that case. LOI 474 was published, though, in
House of Representatives, which now has the exclusive power to initiate the Official Gazette dated November 29,1976.)
appropriation measures, had not yet been convened when the proclamation was
issued. The legislative power was then solely vested in the President of the Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ
Philippines, who embodied, as it were, both houses of Congress. of mandamus cannot issue to compel the performance of a discretionary act,
especially by a specific department of the government. That is true as a general
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should proposition but is subject to one important qualification. Correctly and categorically
be invalidated because they do not provide for retention limits as required by Article stated, the rule is that mandamus will lie to compel the discharge of the discretionary
XIII, Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for duty itself but not to control the discretion to be exercised. In other words, mandamus
such limits now in Section 6 of the law, which in fact is one of its most controversial can issue to require action only but not specific action.
provisions. This section declares:
Whenever a duty is imposed upon a public official and an
Retention Limits. — Except as otherwise provided in this Act, no unnecessary and unreasonable delay in the exercise of such duty
person may own or retain, directly or indirectly, any public or private occurs, if it is a clear duty imposed by law, the courts will intervene
agricultural land, the size of which shall vary according to factors by the extraordinary legal remedy of mandamus to compel action. If
governing a viable family-sized farm, such as commodity produced, the duty is purely ministerial, the courts will require specific action.
terrain, infrastructure, and soil fertility as determined by the If the duty is purely discretionary, the courts by mandamus will
Presidential Agrarian Reform Council (PARC) created hereunder, require action only. For example, if an inferior court, public official,
but in no case shall retention by the landowner exceed five (5) or board should, for an unreasonable length of time, fail to decide a
hectares. Three (3) hectares may be awarded to each child of the particular question to the great detriment of all parties concerned,
landowner, subject to the following qualifications: (1) that he is at or a court should refuse to take jurisdiction of a cause when the law
least fifteen (15) years of age; and (2) that he is actually tilling the clearly gave it jurisdiction mandamus will issue, in the first case to
land or directly managing the farm; Provided, That landowners require a decision, and in the second to require that jurisdiction be
whose lands have been covered by Presidential Decree No. 27 taken of the cause. 22
shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct
15

And while it is true that as a rule the writ will not be proper as long as there is still a Recent trends, however, would indicate not a polarization but a mingling of the police
plain, speedy and adequate remedy available from the administrative authorities, power and the power of eminent domain, with the latter being used as an implement
resort to the courts may still be permitted if the issue raised is a question of law. 23 of the former like the power of taxation. The employment of the taxing power to
achieve a police purpose has long been accepted. 26 As for the power of
III expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which
sustained a zoning law under the police power) makes the following significant
There are traditional distinctions between the police power and the power of eminent remarks:
domain that logically preclude the application of both powers at the same time on the
same subject. In the case of City of Baguio v. NAWASA, 24for example, where a law
required the transfer of all municipal waterworks systems to the NAWASA in Euclid, moreover, was decided in an era when judges located the
exchange for its assets of equivalent value, the Court held that the power being Police and eminent domain powers on different planets. Generally
exercised was eminent domain because the property involved was wholesome and speaking, they viewed eminent domain as encompassing public
intended for a public use. Property condemned under the police power is noxious or acquisition of private property for improvements that would be
intended for a noxious purpose, such as a building on the verge of collapse, which available for public use," literally construed. To the police power, on
should be demolished for the public safety, or obscene materials, which should be the other hand, they assigned the less intrusive task of preventing
destroyed in the interest of public morals. The confiscation of such property is not harmful externalities a point reflected in the Euclid opinion's
compensable, unlike the taking of property under the power of expropriation, which reliance on an analogy to nuisance law to bolster its support of
requires the payment of just compensation to the owner. zoning. So long as suppression of a privately authored harm bore a
plausible relation to some legitimate "public purpose," the pertinent
measure need have afforded no compensation whatever. With the
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits progressive growth of government's involvement in land use, the
of the police power in a famous aphorism: "The general rule at least is that while distance between the two powers has contracted considerably.
property may be regulated to a certain extent, if regulation goes too far it will be Today government often employs eminent domain interchangeably
recognized as a taking." The regulation that went "too far" was a law prohibiting with or as a useful complement to the police power-- a trend
mining which might cause the subsidence of structures for human habitation expressly approved in the Supreme Court's 1954 decision in
constructed on the land surface. This was resisted by a coal company which had Berman v. Parker, which broadened the reach of eminent domain's
earlier granted a deed to the land over its mine but reserved all mining rights "public use" test to match that of the police power's standard of
thereunder, with the grantee assuming all risks and waiving any damage claim. The "public purpose." 27
Court held the law could not be sustained without compensating the grantor. Justice
Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said: The Berman case sustained a redevelopment project and the improvement of
blighted areas in the District of Columbia as a proper exercise of the police power. On
the role of eminent domain in the attainment of this purpose, Justice Douglas
Every restriction upon the use of property imposed in the exercise declared:
of the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights
in property without making compensation. But restriction imposed If those who govern the District of Columbia decide that the
to protect the public health, safety or morals from dangers Nation's Capital should be beautiful as well as sanitary, there is
threatened is not a taking. The restriction here in question is merely nothing in the Fifth Amendment that stands in the way.
the prohibition of a noxious use. The property so restricted remains
in the possession of its owner. The state does not appropriate it or Once the object is within the authority of Congress, the right to
make any use of it. The state merely prevents the owner from realize it through the exercise of eminent domain is clear.
making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious — as it may For the power of eminent domain is merely the means to the end. 28
because of further changes in local or social conditions — the
restriction will have to be removed and the owner will again be free
to enjoy his property as heretofore. In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in
1978, the U.S Supreme Court sustained the respondent's Landmarks Preservation
Law under which the owners of the Grand Central Terminal had not been allowed to
construct a multi-story office building over the Terminal, which had been designated a
16

historic landmark. Preservation of the landmark was held to be a valid objective of the There is also the complaint that they should not be made to share the burden of
police power. The problem, however, was that the owners of the Terminal would be agrarian reform, an objection also made by the sugar planters on the ground that they
deprived of the right to use the airspace above it although other landowners in the belong to a particular class with particular interests of their own. However, no
area could do so over their respective properties. While insisting that there was here evidence has been submitted to the Court that the requisites of a valid classification
no taking, the Court nonetheless recognized certain compensatory rights accruing to have been violated.
Grand Central Terminal which it said would "undoubtedly mitigate" the loss caused by
the regulation. This "fair compensation," as he called it, was explained by Prof. Classification has been defined as the grouping of persons or things similar to each
Costonis in this wise: other in certain particulars and different from each other in these same
particulars. 31 To be valid, it must conform to the following requirements: (1) it must be
In return for retaining the Terminal site in its pristine landmark status, Penn Central based on substantial distinctions; (2) it must be germane to the purposes of the law;
was authorized to transfer to neighboring properties the authorized but unused rights (3) it must not be limited to existing conditions only; and (4) it must apply equally to all
accruing to the site prior to the Terminal's designation as a landmark — the rights the members of the class. 32 The Court finds that all these requisites have been met
which would have been exhausted by the 59-story building that the city refused to by the measures here challenged as arbitrary and discriminatory.
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were
proportionately relaxed, theoretically enabling Penn Central to recoup its losses at the Equal protection simply means that all persons or things similarly situated must be
Terminal site by constructing or selling to others the right to construct larger, hence treated alike both as to the rights conferred and the liabilities imposed. 33 The
more profitable buildings on the transferee sites. 30 petitioners have not shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but also owners of other
The cases before us present no knotty complication insofar as the question of properties must be made to share the burden of implementing land reform must be
compensable taking is concerned. To the extent that the measures under challenge rejected. There is a substantial distinction between these two classes of owners that
merely prescribe retention limits for landowners, there is an exercise of the police is clearly visible except to those who will not see. There is no need to elaborate on
power for the regulation of private property in accordance with the Constitution. But this matter. In any event, the Congress is allowed a wide leeway in providing for a
where, to carry out such regulation, it becomes necessary to deprive such owners of valid classification. Its decision is accorded recognition and respect by the courts of
whatever lands they may own in excess of the maximum area allowed, there is justice except only where its discretion is abused to the detriment of the Bill of Rights.
definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the It is worth remarking at this juncture that a statute may be sustained under the police
use of the land. What is required is the surrender of the title to and the physical power only if there is a concurrence of the lawful subject and the lawful method. Put
possession of the said excess and all beneficial rights accruing to the owner in favor otherwise, the interests of the public generally as distinguished from those of a
of the farmer-beneficiary. This is definitely an exercise not of the police power but of particular class require the interference of the State and, no less important, the
the power of eminent domain. means employed are reasonably necessary for the attainment of the purpose sought
to be achieved and not unduly oppressive upon individuals. 34 As the subject and
Whether as an exercise of the police power or of the power of eminent domain, the purpose of agrarian reform have been laid down by the Constitution itself, we may
several measures before us are challenged as violative of the due process and equal say that the first requirement has been satisfied. What remains to be examined is the
protection clauses. validity of the method employed to achieve the constitutional goal.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no One of the basic principles of the democratic system is that where the rights of the
retention limits are prescribed has already been discussed and dismissed. It is noted individual are concerned, the end does not justify the means. It is not enough that
that although they excited many bitter exchanges during the deliberation of the CARP there be a valid objective; it is also necessary that the means employed to pursue it
Law in Congress, the retention limits finally agreed upon are, curiously enough, not be in keeping with the Constitution. Mere expediency will not excuse constitutional
being questioned in these petitions. We therefore do not discuss them here. The shortcuts. There is no question that not even the strongest moral conviction or the
Court will come to the other claimed violations of due process in connection with our most urgent public need, subject only to a few notable exceptions, will excuse the
examination of the adequacy of just compensation as required under the power of bypassing of an individual's rights. It is no exaggeration to say that a, person invoking
expropriation. a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
The argument of the small farmers that they have been denied equal protection
because of the absence of retention limits has also become academic under Section That right covers the person's life, his liberty and his property under Section 1 of
6 of R.A. No. 6657. Significantly, they too have not questioned the area of such limits. Article III of the Constitution. With regard to his property, the owner enjoys the added
17

protection of Section 9, which reaffirms the familiar rule that private property shall not of the government." It is concerned with issues dependent upon the
be taken for public use without just compensation. wisdom, not legality, of a particular measure.

This brings us now to the power of eminent domain. It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "to
IV determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as a license for us to reverse
Eminent domain is an inherent power of the State that enables it to the other departments simply because their views may not coincide with ours.
forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also The legislature and the executive have been seen fit, in their wisdom, to include in the
acceptable to the purchaser, in which case an ordinary deed of sale CARP the redistribution of private landholdings (even as the distribution of public
may be agreed upon by the parties. 35 It is only where the owner is agricultural lands is first provided for, while also continuing apace under the Public
unwilling to sell, or cannot accept the price or other conditions Land Act and other cognate laws). The Court sees no justification to interpose its
offered by the vendee, that the power of eminent domain will come authority, which we may assert only if we believe that the political decision is not
into play to assert the paramount authority of the State over the unwise, but illegal. We do not find it to be so.
interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
justification, as in the case of the police power, that the welfare of
the people is the supreme law. Congress having determined, as it did by the Act of March 3,1909
that the entire St. Mary's river between the American bank and the
But for all its primacy and urgency, the power of expropriation is by no means international line, as well as all of the upland north of the present
absolute (as indeed no power is absolute). The limitation is found in the constitutional ship canal, throughout its entire length, was "necessary for the
injunction that "private property shall not be taken for public use without just purpose of navigation of said waters, and the waters connected
compensation" and in the abundant jurisprudence that has evolved from the therewith," that determination is conclusive in condemnation
interpretation of this principle. Basically, the requirements for a proper exercise of the proceedings instituted by the United States under that Act, and
power are: (1) public use and (2) just compensation. there is no room for judicial review of the judgment of Congress ... .

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that As earlier observed, the requirement for public use has already been settled for us by
the State should first distribute public agricultural lands in the pursuit of agrarian the Constitution itself No less than the 1987 Charter calls for agrarian reform, which is
reform instead of immediately disturbing property rights by forcibly acquiring private the reason why private agricultural lands are to be taken from their owners, subject to
agricultural lands. Parenthetically, it is not correct to say that only public agricultural the prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc.
lands may be covered by the CARP as the Constitution calls for "the just distribution No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that
of all agricultural lands." In any event, the decision to redistribute private agricultural the State adopt the necessary measures "to encourage and undertake the just
lands in the manner prescribed by the CARP was made by the legislative and distribution of all agricultural lands to enable farmers who are landless to own directly
executive departments in the exercise of their discretion. We are not justified in or collectively the lands they till." That public use, as pronounced by the fundamental
reviewing that discretion in the absence of a clear showing that it has been abused. law itself, must be binding on us.

A becoming courtesy admonishes us to respect the decisions of the political The second requirement, i.e., the payment of just compensation, needs a longer and
departments when they decide what is known as the political question. As explained more thoughtful examination.
by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
Just compensation is defined as the full and fair equivalent of the property taken from
The term "political question" connotes what it means in ordinary its owner by the expropriator. 39 It has been repeatedly stressed by this Court that the
parlance, namely, a question of policy. It refers to "those questions measure is not the taker's gain but the owner's loss. 40 The word "just" is used to
which, under the Constitution, are to be decided by the people in intensify the meaning of the word "compensation" to convey the idea that the
their sovereign capacity; or in regard to which full discretionary equivalent to be rendered for the property to be taken shall be real, substantial, full,
authority has been delegated to the legislative or executive branch ample. 41
18

It bears repeating that the measures challenged in these petitions contemplate more To be sure, the determination of just compensation is a function addressed to the
than a mere regulation of the use of private lands under the police power. We deal courts of justice and may not be usurped by any other branch or official of the
here with an actual taking of private agricultural lands that has dispossessed the government. EPZA v. Dulay 44 resolved a challenge to several decrees promulgated
owners of their property and deprived them of all its beneficial use and enjoyment, to by President Marcos providing that the just compensation for property under
entitle them to the just compensation mandated by the Constitution. expropriation should be either the assessment of the property by the government or
the sworn valuation thereof by the owner, whichever was lower. In declaring these
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
when the following conditions concur: (1) the expropriator must enter a private
property; (2) the entry must be for more than a momentary period; (3) the entry must The method of ascertaining just compensation under the aforecited
be under warrant or color of legal authority; (4) the property must be devoted to public decrees constitutes impermissible encroachment on judicial
use or otherwise informally appropriated or injuriously affected; and (5) the utilization prerogatives. It tends to render this Court inutile in a matter which
of the property for public use must be in such a way as to oust the owner and deprive under this Constitution is reserved to it for final determination.
him of beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us. Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for
Where the State itself is the expropriator, it is not necessary for it to make a deposit the property, following the applicable decrees, its task would be
upon its taking possession of the condemned property, as "the compensation is a relegated to simply stating the lower value of the property as
public charge, the good faith of the public is pledged for its payment, and all the declared either by the owner or the assessor. As a necessary
resources of taxation may be employed in raising the amount." 43 Nevertheless, consequence, it would be useless for the court to appoint
Section 16(e) of the CARP Law provides that: commissioners under Rule 67 of the Rules of Court. Moreover, the
need to satisfy the due process clause in the taking of private
Upon receipt by the landowner of the corresponding payment or, in property is seemingly fulfilled since it cannot be said that a judicial
case of rejection or no response from the landowner, upon the proceeding was not had before the actual taking. However, the
deposit with an accessible bank designated by the DAR of the strict application of the decrees during the proceedings would be
compensation in cash or in LBP bonds in accordance with this Act, nothing short of a mere formality or charade as the court has only
the DAR shall take immediate possession of the land and shall to choose between the valuation of the owner and that of the
request the proper Register of Deeds to issue a Transfer Certificate assessor, and its choice is always limited to the lower of the two.
of Title (TCT) in the name of the Republic of the Philippines. The The court cannot exercise its discretion or independence in
DAR shall thereafter proceed with the redistribution of the land to determining what is just or fair. Even a grade school pupil could
the qualified beneficiaries. substitute for the judge insofar as the determination of constitutional
just compensation is concerned.
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial xxx
prerogatives. Specific reference is made to Section 16(d), which provides that in case
of the rejection or disregard by the owner of the offer of the government to buy his In the present petition, we are once again confronted with the same
land- question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor
... the DAR shall conduct summary administrative proceedings to decrees, still have the power and authority to determine just
determine the compensation for the land by requiring the compensation, independent of what is stated by the decree and to
landowner, the LBP and other interested parties to submit evidence this effect, to appoint commissioners for such purpose.
as to the just compensation for the land, within fifteen (15) days
from the receipt of the notice. After the expiration of the above This time, we answer in the affirmative.
period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for xxx
decision.
It is violative of due process to deny the owner the opportunity to
prove that the valuation in the tax documents is unfair or wrong.
19

And it is repulsive to the basic concepts of justice and fairness to government financial
allow the haphazard work of a minor bureaucrat or clerk to instruments negotiable at any
absolutely prevail over the judgment of a court promulgated only time.
after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and (b) For lands above twenty-four
after all factors and considerations essential to a fair and just (24) hectares and up to fifty (50)
determination have been judiciously evaluated. hectares — Thirty percent
(30%) cash, the balance to be
A reading of the aforecited Section 16(d) will readily show that it does not suffer from paid in government financial
the arbitrariness that rendered the challenged decrees constitutionally objectionable. instruments negotiable at any
Although the proceedings are described as summary, the landowner and other time.
interested parties are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, the determination of the just (c) For lands twenty-four (24)
compensation by the DAR is not by any means final and conclusive upon the hectares and below — Thirty-
landowner or any other interested party, for Section 16(f) clearly provides: five percent (35%) cash, the
balance to be paid in
Any party who disagrees with the decision may bring the matter to government financial
the court of proper jurisdiction for final determination of just instruments negotiable at any
compensation. time.

The determination made by the DAR is only preliminary unless accepted by all parties (2) Shares of stock in government-owned or controlled corporations,
concerned. Otherwise, the courts of justice will still have the right to review with LBP preferred shares, physical assets or other qualified investments
finality the said determination in the exercise of what is admittedly a judicial function. in accordance with guidelines set by the PARC;

The second and more serious objection to the provisions on just compensation is not (3) Tax credits which can be used against any tax liability;
as easily resolved.
(4) LBP bonds, which shall have the following features:
This refers to Section 18 of the CARP Law providing in full as follows:
(a) Market interest rates aligned
SEC. 18. Valuation and Mode of Compensation. — The LBP shall with 91-day treasury bill rates.
compensate the landowner in such amount as may be agreed upon Ten percent (10%) of the face
by the landowner and the DAR and the LBP, in accordance with the value of the bonds shall mature
criteria provided for in Sections 16 and 17, and other pertinent every year from the date of
provisions hereof, or as may be finally determined by the court, as issuance until the tenth (10th)
the just compensation for the land. year: Provided, That should the
landowner choose to forego the
The compensation shall be paid in one of the following modes, at cash portion, whether in full or
the option of the landowner: in part, he shall be paid
correspondingly in LBP bonds;
(1) Cash payment, under the following terms and conditions:
(b) Transferability and
negotiability. Such LBP bonds
(a) For lands above fifty (50) may be used by the landowner,
hectares, insofar as the excess his successors-in- interest or
hectarage is concerned — his assigns, up to the amount of
Twenty-five percent (25%) their face value, for any of the
cash, the balance to be paid in following:
20

(i) Acquisition of land or other government universities,


real properties of the colleges, trade schools, and
government, including assets other institutions;
under the Asset Privatization
Program and other assets (vii) Payment for fees of the
foreclosed by government immediate family of the original
financial institutions in the same bondholder in government
province or region where the hospitals; and
lands for which the bonds were
paid are situated;
(viii) Such other uses as the
PARC may from time to time
(ii) Acquisition of shares of stock allow.
of government-owned or
controlled corporations or
shares of stock owned by the The contention of the petitioners in G.R. No. 79777 is that the above provision is
government in private unconstitutional insofar as it requires the owners of the expropriated properties to
corporations; accept just compensation therefor in less than money, which is the only medium of
payment allowed. In support of this contention, they cite jurisprudence holding that:
(iii) Substitution for surety or bail
bonds for the provisional The fundamental rule in expropriation matters is that the owner of
release of accused persons, or the property expropriated is entitled to a just compensation, which
for performance bonds; should be neither more nor less, whenever it is possible to make
the assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
(iv) Security for loans with any complete equivalent of the loss which the owner of the thing
government financial institution, expropriated has to suffer by reason of the expropriation
provided the proceeds of the . 45 (Emphasis supplied.)
loans shall be invested in an
economic enterprise, preferably 46
in a small and medium- scale In J.M. Tuazon Co. v. Land Tenure Administration, this Court held:
industry, in the same province
or region as the land for which It is well-settled that just compensation means the equivalent for
the bonds are paid; the value of the property at the time of its taking. Anything beyond
that is more, and anything short of that is less, than just
(v) Payment for various taxes compensation. It means a fair and full equivalent for the loss
and fees to government: sustained, which is the measure of the indemnity, not whatever
Provided, That the use of these gain would accrue to the expropriating entity. The market value of
bonds for these purposes will be the land taken is the just compensation to which the owner of
limited to a certain percentage condemned property is entitled, the market value being that sum of
of the outstanding balance of money which a person desirous, but not compelled to buy, and an
the financial instruments; owner, willing, but not compelled to sell, would agree on as a price
Provided, further, That the to be given and received for such property. (Emphasis supplied.)
PARC shall determine the
percentages mentioned above; In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for property
(vi) Payment for tuition fees of expropriated is payable only in money and not otherwise. Thus —
the immediate family of the
original bondholder in
21

The medium of payment of compensation is ready money or cash. we estimate that hundreds of billions of pesos will be needed, far more indeed than
The condemnor cannot compel the owner to accept anything but the amount of P50 billion initially appropriated, which is already staggering as it is by
money, nor can the owner compel or require the condemnor to pay our present standards. Such amount is in fact not even fully available at this time.
him on any other basis than the value of the property in money at
the time and in the manner prescribed by the Constitution and the We assume that the framers of the Constitution were aware of this difficulty when
statutes. When the power of eminent domain is resorted to, there they called for agrarian reform as a top priority project of the government. It is a part
must be a standard medium of payment, binding upon both parties, of this assumption that when they envisioned the expropriation that would be needed,
and the law has fixed that standard as money in cash. 47 (Emphasis they also intended that the just compensation would have to be paid not in the
supplied.) orthodox way but a less conventional if more practical method. There can be no doubt
that they were aware of the financial limitations of the government and had no
Part cash and deferred payments are not and cannot, in the nature illusions that there would be enough money to pay in cash and in full for the lands
of things, be regarded as a reliable and constant standard of they wanted to be distributed among the farmers. We may therefore assume that their
compensation. 48 intention was to allow such manner of payment as is now provided for by the CARP
Law, particularly the payment of the balance (if the owner cannot be paid fully with
"Just compensation" for property taken by condemnation means a money), or indeed of the entire amount of the just compensation, with other things of
fair equivalent in money, which must be paid at least within a value. We may also suppose that what they had in mind was a similar scheme of
reasonable time after the taking, and it is not within the power of the payment as that prescribed in P.D. No. 27, which was the law in force at the time they
Legislature to substitute for such payment future obligations, bonds, deliberated on the new Charter and with which they presumably agreed in principle.
or other valuable advantage. 49(Emphasis supplied.)
The Court has not found in the records of the Constitutional Commission any
It cannot be denied from these cases that the traditional medium for the payment of categorical agreement among the members regarding the meaning to be given the
just compensation is money and no other. And so, conformably, has just concept of just compensation as applied to the comprehensive agrarian reform
compensation been paid in the past solely in that medium. However, we do not deal program being contemplated. There was the suggestion to "fine tune" the requirement
here with the traditional excercise of the power of eminent domain. This is not an to suit the demands of the project even as it was also felt that they should "leave it to
ordinary expropriation where only a specific property of relatively limited area is Congress" to determine how payment should be made to the landowner and
sought to be taken by the State from its owner for a specific and perhaps local reimbursement required from the farmer-beneficiaries. Such innovations as
purpose. "progressive compensation" and "State-subsidized compensation" were also
proposed. In the end, however, no special definition of the just compensation for the
lands to be expropriated was reached by the Commission. 50
What we deal with here is a revolutionary kind of expropriation.
On the other hand, there is nothing in the records either that militates against the
The expropriation before us affects all private agricultural lands whenever found and assumptions we are making of the general sentiments and intention of the members
of whatever kind as long as they are in excess of the maximum retention limits on the content and manner of the payment to be made to the landowner in the light of
allowed their owners. This kind of expropriation is intended for the benefit not only of the magnitude of the expenditure and the limitations of the expropriator.
a particular community or of a small segment of the population but of the entire
Filipino nation, from all levels of our society, from the impoverished farmer to the land-
glutted owner. Its purpose does not cover only the whole territory of this country but With these assumptions, the Court hereby declares that the content and manner of
goes beyond in time to the foreseeable future, which it hopes to secure and edify with the just compensation provided for in the afore- quoted Section 18 of the CARP Law
the vision and the sacrifice of the present generation of Filipinos. Generations yet to is not violative of the Constitution. We do not mind admitting that a certain degree of
come are as involved in this program as we are today, although hopefully only as pragmatism has influenced our decision on this issue, but after all this Court is not a
beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow cloistered institution removed from the realities and demands of society or oblivious to
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less the need for its enhancement. The Court is as acutely anxious as the rest of our
than the Constitution itself that has ordained this revolution in the farms, calling for "a people to see the goal of agrarian reform achieved at last after the frustrations and
just distribution" among the farmers of lands that have heretofore been the prison of deprivations of our peasant masses during all these disappointing decades. We are
their dreams but can now become the key at least to their deliverance. aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and
resurrecting the spectre of discontent and dissent in the restless countryside. That is
Such a program will involve not mere millions of pesos. The cost will be tremendous. not in our view the intention of the Constitution, and that is not what we shall decree
Considering the vast areas of land subject to expropriation under the laws before us, today.
22

Accepting the theory that payment of the just compensation is not always required to In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that
be made fully in money, we find further that the proportion of cash payment to the title to property does not pass to the condemnor until just compensation had actually
other things of value constituting the total payment, as determined on the basis of the been made. In fact, the decisions appear to be uniformly to this effect. As early as
areas of the lands expropriated, is not unduly oppressive upon the landowner. It is 1838, in Rubottom v. McLure, 54 it was held that "actual payment to the owner of the
noted that the smaller the land, the bigger the payment in money, primarily because condemned property was a condition precedent to the investment of the title to the
the small landowner will be needing it more than the big landowners, who can afford a property in the State" albeit "not to the appropriation of it to public use." In Rexford v.
bigger balance in bonds and other things of value. No less importantly, the Knight, 55 the Court of Appeals of New York said that the construction upon the
government financial instruments making up the balance of the payment are statutes was that the fee did not vest in the State until the payment of the
"negotiable at any time." The other modes, which are likewise available to the compensation although the authority to enter upon and appropriate the land was
landowner at his option, are also not unreasonable because payment is made in complete prior to the payment. Kennedy further said that "both on principle and
shares of stock, LBP bonds, other properties or assets, tax credits, and other things authority the rule is ... that the right to enter on and use the property is complete, as
of value equivalent to the amount of just compensation. soon as the property is actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his consent, until just
Admittedly, the compensation contemplated in the law will cause the landowners, big compensation has been made to him."
and small, not a little inconvenience. As already remarked, this cannot be avoided.
Nevertheless, it is devoutly hoped that these countrymen of ours, conscious as we Our own Supreme Court has held in Visayan Refining Co. v. Camus and
know they are of the need for their forebearance and even sacrifice, will not begrudge Paredes, 56 that:
us their indispensable share in the attainment of the ideal of agrarian reform.
Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail. If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
The complaint against the effects of non-registration of the land under E.O. No. 229 method of expropriation adopted in this jurisdiction is such as to
does not seem to be viable any more as it appears that Section 4 of the said Order afford absolute reassurance that no piece of land can be finally and
has been superseded by Section 14 of the CARP Law. This repeats the requisites of irrevocably taken from an unwilling owner until compensation is
registration as embodied in the earlier measure but does not provide, as the latter did, paid ... . (Emphasis supplied.)
that in case of failure or refusal to register the land, the valuation thereof shall be that
given by the provincial or city assessor for tax purposes. On the contrary, the CARP It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as
Law says that the just compensation shall be ascertained on the basis of the factors October 21, 1972 and declared that he shall "be deemed the owner" of a portion of
mentioned in its Section 17 and in the manner provided for in Section 16. land consisting of a family-sized farm except that "no title to the land owned by him
was to be actually issued to him unless and until he had become a full-fledged
The last major challenge to CARP is that the landowner is divested of his property member of a duly recognized farmers' cooperative." It was understood, however, that
even before actual payment to him in full of just compensation, in contravention of a full payment of the just compensation also had to be made first, conformably to the
well- accepted principle of eminent domain. constitutional requirement.

The recognized rule, indeed, is that title to the property expropriated shall pass from When E.O. No. 228, categorically stated in its Section 1 that:
the owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic All qualified farmer-beneficiaries are now deemed full owners as of
jurisdictions. Thus: October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the it was obviously referring to lands already validly acquired under the said decree,
condemnor's title relates back to the date on which the petition under the Eminent after proof of full-fledged membership in the farmers' cooperatives and full payment of
Domain Act, or the commissioner's report under the Local Improvement Act, is just compensation. Hence, it was also perfectly proper for the Order to also provide in
filed. 51 its Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full payment of just
... although the right to appropriate and use land taken for a canal is complete at the compensation), shall be considered as advance payment for the land."
time of entry, title to the property taken remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
23

The CARP Law, for its part, conditions the transfer of possession and ownership of By the decision we reach today, all major legal obstacles to the comprehensive
the land to the government on receipt by the landowner of the corresponding payment agrarian reform program are removed, to clear the way for the true freedom of the
or the deposit by the DAR of the compensation in cash or LBP bonds with an farmer. We may now glimpse the day he will be released not only from want but also
accessible bank. Until then, title also remains with the landowner. 57 No outright from the exploitation and disdain of the past and from his own feelings of inadequacy
change of ownership is contemplated either. and helplessness. At last his servitude will be ended forever. At last the farm on which
he toils will be his farm. It will be his portion of the Mother Earth that will give him not
Hence, the argument that the assailed measures violate due process by arbitrarily only the staff of life but also the joy of living. And where once it bred for him only deep
transferring title before the land is fully paid for must also be rejected. despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now
at last can he banish from his small plot of earth his insecurities and dark resentments
and "rebuild in it the music and the dream."
It is worth stressing at this point that all rights acquired by the tenant-farmer under
P.D. No. 27, as recognized under E.O. No. 228, are retained by him even now under
R.A. No. 6657. This should counter-balance the express provision in Section 6 of the WHEREFORE, the Court holds as follows:
said law that "the landowners whose lands have been covered by Presidential Decree
No. 27 shall be allowed to keep the area originally retained by them thereunder, 1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228
further, That original homestead grantees or direct compulsory heirs who still own the and 229 are SUSTAINED against all the constitutional objections
original homestead at the time of the approval of this Act shall retain the same areas raised in the herein petitions.
as long as they continue to cultivate said homestead."
2. Title to all expropriated properties shall be transferred to the
In connection with these retained rights, it does not appear in G.R. No. 78742 that the State only upon full payment of compensation to their respective
appeal filed by the petitioners with the Office of the President has already been owners.
resolved. Although we have said that the doctrine of exhaustion of administrative
remedies need not preclude immediate resort to judicial action, there are factual 3. All rights previously acquired by the tenant- farmers under P.D.
issues that have yet to be examined on the administrative level, especially the claim No. 27 are retained and recognized.
that the petitioners are not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A.
Obviously, the Court cannot resolve these issues. In any event, assuming that the No. 6657 under the conditions therein prescribed.
petitioners have not yet exercised their retention rights, if any, under P.D. No. 27, the
Court holds that they are entitled to the new retention rights provided for by R.A. No.
6657, which in fact are on the whole more liberal than those granted by the decree. 5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
V
SO ORDERED.
The CARP Law and the other enactments also involved in these cases have been the
subject of bitter attack from those who point to the shortcomings of these measures Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,
and ask that they be scrapped entirely. To be sure, these enactments are less than Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado,
perfect; indeed, they should be continuously re-examined and rehoned, that they may JJ., concur.
be sharper instruments for the better protection of the farmer's rights. But we have to
start somewhere. In the pursuit of agrarian reform, we do not tread on familiar ground
but grope on terrain fraught with pitfalls and expected difficulties. This is inevitable.
The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as
we venture forward, and, if necessary, by our own mistakes. We cannot expect
perfection although we should strive for it by all means. Meantime, we struggle as
best we can in freeing the farmer from the iron shackles that have unconscionably,
and for so long, fettered his soul to the soil.
24

Land reform, or the broader term "agrarian reform," has been a government policy
even before the Commonwealth era. In fact, at the onset of the American regime,
initial steps toward land reform were already taken to address social unrest. 4 Then,
under the 1935 Constitution, specific provisions on social justice and expropriation of
landed estates for distribution to tenants as a solution to land ownership and tenancy
issues were incorporated.

In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting in
motion the expropriation of all tenanted estates.5

On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was
enacted,6 abolishing share tenancy and converting all instances of share tenancy into
leasehold tenancy.7 RA 3844 created the Land Bank of the Philippines (LBP) to
provide support in all phases of agrarian reform.

EN BANC As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice
and corn, supposedly to be accomplished by expropriating lands in excess of 75
hectares for their eventual resale to tenants. The law, however, had this restricting
G.R. No. 171101 July 5, 2011 feature: its operations were confined mainly to areas in Central Luzon, and its
implementation at any level of intensity limited to the pilot project in Nueva Ecija. 8
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring
BANKING CORPORATION,Petitioners-in-Intervention, the entire country a land reform area, and providing for the automatic conversion of
vs. tenancy to leasehold tenancy in all areas. From 75 hectares, the retention limit was
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER cut down to seven hectares.9
PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA
NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG,
NOEL MALLARI, and JULIO SUNIGA1 and his SUPERVISORY GROUP OF THE Barely a month after declaring martial law in September 1972, then President
HACIENDA LUISITA, INC. and WINDSOR ANDAYA, Respondents. Ferdinand Marcos issued Presidential Decree No. 27 (PD 27) for the "emancipation of
the tiller from the bondage of the soil."10 Based on this issuance, tenant-farmers,
depending on the size of the landholding worked on, can either purchase the land
DECISION they tilled or shift from share to fixed-rent leasehold tenancy.11 While touted as
"revolutionary," the scope of the agrarian reform program PD 27 enunciated covered
VELASCO, JR., J.: only tenanted, privately-owned rice and corn lands.12

"Land for the landless," a shibboleth the landed gentry doubtless has received with Then came the revolutionary government of then President Corazon C. Aquino and
much misgiving, if not resistance, even if only the number of agrarian suits filed the drafting and eventual ratification of the 1987 Constitution. Its provisions
serves to be the norm. Through the years, this battle cry and root of discord continues foreshadowed the establishment of a legal framework for the formulation of an
to reflect the seemingly ceaseless discourse on, and great disparity in, the distribution expansive approach to land reform, affecting all agricultural lands and covering both
of land among the people, "dramatizing the increasingly urgent demand of the tenant-farmers and regular farmworkers.13
dispossessed x x x for a plot of earth as their place in the sun." 2 As administrations
and political alignments change, policies advanced, and agrarian reform laws So it was that Proclamation No. 131, Series of 1987, was issued instituting a
enacted, the latest being what is considered a comprehensive piece, the face of land comprehensive agrarian reform program (CARP) to cover all agricultural lands,
reform varies and is masked in myriads of ways. The stated goal, however, remains regardless of tenurial arrangement and commodity produced, as provided in the
the same: clear the way for the true freedom of the farmer.3 Constitution.
25

On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as its As of March 31, 1958, Tadeco had fully paid the purchase price for the acquisition of
title14 indicates, the mechanisms for CARP implementation. It created the Presidential Hacienda Luisita and Tabacalera’s interest in CAT.22
Agrarian Reform Council (PARC) as the highest policy-making body that formulates
all policies, rules, and regulations necessary for the implementation of CARP. The details of the events that happened next involving the hacienda and the political
color some of the parties embossed are of minimal significance to this narration and
On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, need no belaboring. Suffice it to state that on May 7, 1980, the martial law
also known as CARL or the CARP Law, took effect, ushering in a new process of land administration filed a suit before the Manila Regional Trial Court (RTC) against
classification, acquisition, and distribution. As to be expected, RA 6657 met stiff Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian
opposition, its validity or some of its provisions challenged at every possible Reform (MAR, now the Department of Agrarian Reform [DAR]) so that the land can
turn. Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian be distributed to farmers at cost. Responding, Tadeco or its owners alleged that
Reform 15 stated the observation that the assault was inevitable, the CARP being an Hacienda Luisita does not have tenants, besides which sugar lands––of which the
untried and untested project, "an experiment [even], as all life is an experiment," the hacienda consisted––are not covered by existing agrarian reform legislations. As
Court said, borrowing from Justice Holmes. perceived then, the government commenced the case against Tadeco as a political
message to the family of the late Benigno Aquino, Jr.23
The Case
Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender
In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the Court of Appeals
injunctive relief, petitioner Hacienda Luisita, Inc. (HLI) assails and seeks to set aside (CA).
PARC Resolution No. 2005-32-0116 and Resolution No. 2006-34-0117 issued on
December 22, 2005 and May 3, 2006, respectively, as well as the implementing On March 17, 1988, the Office of the Solicitor General (OSG) moved to withdraw the
Notice of Coverage dated January 2, 2006 (Notice of Coverage).18 government’s case against Tadeco, et al. By Resolution of May 18, 1988, the CA
dismissed the case the Marcos government initially instituted and won against
The Facts Tadeco, et al. The dismissal action was, however, made subject to the obtention by
Tadeco of the PARC’s approval of a stock distribution plan (SDP) that must initially be
implemented after such approval shall have been secured.24 The appellate court
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once a wrote:
6,443-hectare mixed agricultural-industrial-residential expanse straddling several
municipalities of Tarlac and owned by Compañia General de Tabacos de Filipinas
(Tabacalera). In 1957, the Spanish owners of Tabacalera offered to sell Hacienda The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x x
Luisita as well as their controlling interest in the sugar mill within the hacienda, the governmental agencies concerned in moving for the dismissal of the case subject,
Central Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac however, to the following conditions embodied in the letter dated April 8, 1988 (Annex
Development Corporation (Tadeco), then owned and/or controlled by the Jose 2) of the Secretary of the [DAR] quoted, as follows:
Cojuangco, Sr. Group, was willing to buy. As agreed upon, Tadeco undertook to pay
the purchase price for Hacienda Luisita in pesos, while that for the controlling interest 1. Should TADECO fail to obtain approval of the stock distribution plan for
in CAT, in US dollars.19 failure to comply with all the requirements for corporate landowners set forth
in the guidelines issued by the [PARC]: or
To facilitate the adverted sale-and-purchase package, the Philippine government,
through the then Central Bank of the Philippines, assisted the buyer to obtain a dollar 2. If such stock distribution plan is approved by PARC, but TADECO fails to
loan from a US bank.20 Also, the Government Service Insurance System (GSIS) initially implement it.
Board of Trustees extended on November 27, 1957 a PhP 5.911 million loan in favor
of Tadeco to pay the peso price component of the sale. One of the conditions xxxx
contained in the approving GSIS Resolution No. 3203, as later amended by
Resolution No. 356, Series of 1958, reads as follows:
WHEREFORE, the present case on appeal is hereby dismissed without prejudice,
and should be revived if any of the conditions as above set forth is not duly complied
That the lots comprising the Hacienda Luisita shall be subdivided by the applicant- with by the TADECO.25
corporation and sold at cost to the tenants, should there be any, and whenever
conditions should exist warranting such action under the provisions of the Land
Tenure Act;21
26

Markedly, Section 10 of EO 22926 allows corporate landowners, as an alternative to distribution approved by the PARC within the same period, the agricultural land of the
the actual land transfer scheme of CARP, to give qualified beneficiaries the right to corporate owners or corporation shall be subject to the compulsory coverage of this
purchase shares of stocks of the corporation under a stock ownership arrangement Act. (Emphasis added.)
and/or land-to-share ratio.
Vis-à-vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued
Like EO 229, RA 6657, under the latter’s Sec. 31, also provides two (2) alternative Administrative Order No. 10, Series of 1988 (DAO 10),27 entitled Guidelines and
modalities, i.e., land or stock transfer, pursuant to either of which the corporate Procedures for Corporate Landowners Desiring to Avail Themselves of the Stock
landowner can comply with CARP, but subject to well-defined conditions and timeline Distribution Plan under Section 31 of RA 6657.
requirements. Sec. 31 of RA 6657 provides:
From the start, the stock distribution scheme appeared to be Tadeco’s preferred
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily transfer option, for, on August 23, 1988,28 it organized a spin-off corporation, HLI, as vehicle
ownership over their agricultural landholdings to the Republic of the Philippines to facilitate stock acquisition by the farmworkers. For this purpose, Tadeco assigned
pursuant to Section 20 hereof or to qualified beneficiaries x x x. and conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-
related properties of Hacienda Luisita in exchange for HLI shares of stock. 29
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and
stock of the corporation that the agricultural land, actually devoted to Paz C. Teopaco were the incorporators of HLI.30
agricultural activities, bears in relation to the company’s total assets, under
such terms and conditions as may be agreed upon by them. In no case shall the To accommodate the assets transfer from Tadeco to HLI, the latter, with the
compensation received by the workers at the time the shares of stocks are distributed Securities and Exchange Commission’s (SEC’s) approval, increased its capital stock
be reduced. x x x on May 10, 1989 from PhP 1,500,000 divided into 1,500,000 shares with a par value
of PhP 1/share to PhP 400,000,000 divided into 400,000,000 shares also with par
Corporations or associations which voluntarily divest a proportion of their capital value of PhP 1/share, 150,000,000 of which were to be issued only to qualified and
stock, equity or participation in favor of their workers or other qualified beneficiaries registered beneficiaries of the CARP, and the remaining 250,000,000 to any
under this section shall be deemed to have complied with the provisions of this Act: stockholder of the corporation.31
Provided, That the following conditions are complied with:
As appearing in its proposed SDP, the properties and assets of Tadeco contributed to
(a) In order to safeguard the right of beneficiaries who own shares of stocks the capital stock of HLI, as appraised and approved by the SEC, have an aggregate
to dividends and other financial benefits, the books of the corporation or value of PhP 590,554,220, or after deducting the total liabilities of the farm amounting
association shall be subject to periodic audit by certified public accountants to PhP 235,422,758, a net value of PhP 355,531,462. This translated to 355,531,462
chosen by the beneficiaries; shares with a par value of PhP 1/share.32

(b) Irrespective of the value of their equity in the corporation or association, On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs)
the beneficiaries shall be assured of at least one (1) representative in the complement of Hacienda Luisita signified in a referendum their acceptance of the
board of directors, or in a management or executive committee, if one exists, proposed HLI’s Stock Distribution Option Plan. On May 11, 1989, the Stock
of the corporation or association; Distribution Option Agreement (SDOA), styled as a Memorandum of Agreement
(MOA),33 was entered into by Tadeco, HLI, and the 5,848 qualified FWBs34 and
(c) Any shares acquired by such workers and beneficiaries shall have the attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and
same rights and features as all other shares; and mechanics of the SDP, which would eventually be submitted to the PARC for
approval. In the SDOA, the parties agreed to the following:
(d) Any transfer of shares of stocks by the original beneficiaries shall be void
ab initio unless said transaction is in favor of a qualified and registered 1. The percentage of the value of the agricultural land of Hacienda Luisita
beneficiary within the same corporation. (P196,630,000.00) in relation to the total assets (P590,554,220.00)
transferred and conveyed to the SECOND PARTY [HLI] is 33.296% that,
under the law, is the proportion of the outstanding capital stock of the
If within two (2) years from the approval of this Act, the [voluntary] land or stock SECOND PARTY, which is P355,531,462.00 or 355,531,462 shares with a
transfer envisioned above is not made or realized or the plan for such stock par value of P1.00 per share, that has to be distributed to the THIRD PARTY
27

[FWBs] under the stock distribution plan, the said 33.296% thereof being view of improving the lot of the qualified beneficiaries of the [SDP] and
P118,391,976.85 or 118,391,976.85 shares. obtaining for them greater benefits. (Emphasis added.)

2. The qualified beneficiaries of the stock distribution plan shall be the As may be gleaned from the SDOA, included as part of the distribution plan are: (a)
farmworkers who appear in the annual payroll, inclusive of the permanent production-sharing equivalent to three percent (3%) of gross sales from the
and seasonal employees, who are regularly or periodically employed by the production of the agricultural land payable to the FWBs in cash dividends or incentive
SECOND PARTY. bonus; and (b) distribution of free homelots of not more than 240 square meters each
to family-beneficiaries. The production-sharing, as the SDP indicated, is payable
3. At the end of each fiscal year, for a period of 30 years, the SECOND "irrespective of whether [HLI] makes money or not," implying that the benefits do not
PARTY shall arrange with the FIRST PARTY [Tadeco] the acquisition and partake the nature of dividends, as the term is ordinarily understood under
distribution to the THIRD PARTY on the basis of number of days worked corporation law.
and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the
capital stock of the SECOND PARTY that are presently owned and held by While a little bit hard to follow, given that, during the period material, the assigned
the FIRST PARTY, until such time as the entire block of 118,391,976.85 value of the agricultural land in the hacienda was PhP 196.63 million, while the total
shares shall have been completely acquired and distributed to the THIRD assets of HLI was PhP 590.55 million with net assets of PhP 355.53 million,
PARTY. Tadeco/HLI would admit that the ratio of the land-to-shares of stock corresponds to
33.3% of the outstanding capital stock of the HLI equivalent to 118,391,976.85 shares
4.The SECOND PARTY shall guarantee to the qualified beneficiaries of the of stock with a par value of PhP 1/share.
[SDP] that every year they will receive on top of their regular compensation,
an amount that approximates the equivalent of three (3%) of the total gross Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for Stock
sales from the production of the agricultural land, whether it be in the form of Distribution under C.A.R.P.,"35which was substantially based on the SDOA.
cash dividends or incentive bonuses or both.
Notably, in a follow-up referendum the DAR conducted on October 14, 1989, 5,117
5. Even if only a part or fraction of the shares earmarked for distribution will FWBs, out of 5,315 who participated, opted to receive shares in HLI.36 One hundred
have been acquired from the FIRST PARTY and distributed to the THIRD thirty-two (132) chose actual land distribution.37
PARTY, FIRST PARTY shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in favor of the After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec.
farmworkers appearing as shareholders of the SECOND PARTY at the start Defensor-Santiago) addressed a letter dated November 6, 198938 to Pedro S.
of said year which will empower the THIRD PARTY or their representative to Cojuangco (Cojuangco), then Tadeco president, proposing that the SDP be revised,
vote in stockholders’ and board of directors’ meetings of the SECOND along the following lines:
PARTY convened during the year the entire 33.296% of the outstanding
capital stock of the SECOND PARTY earmarked for distribution and thus be
able to gain such number of seats in the board of directors of the SECOND 1. That over the implementation period of the [SDP], [Tadeco]/HLI shall
PARTY that the whole 33.296% of the shares subject to distribution will be ensure that there will be no dilution in the shares of stocks of individual
entitled to. [FWBs];

6. In addition, the SECOND PARTY shall within a reasonable time subdivide 2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of
and allocate for free and without charge among the qualified family- the percentage shareholdings of the [FWBs], i.e., that the 33%
beneficiaries residing in the place where the agricultural land is situated, shareholdings of the [FWBs] will be maintained at any given time;
residential or homelots of not more than 240 sq.m. each, with each family-
beneficiary being assured of receiving and owning a homelot in the 3. That the mechanics for distributing the stocks be explicitly stated in the
barangay where it actually resides on the date of the execution of this [MOA] signed between the [Tadeco], HLI and its [FWBs] prior to the
Agreement. implementation of the stock plan;

7. This Agreement is entered into by the parties in the spirit of the (C.A.R.P.) 4. That the stock distribution plan provide for clear and definite terms for
of the government and with the supervision of the [DAR], with the end in determining the actual number of seats to be allocated for the [FWBs] in the
HLI Board;
28

5. That HLI provide guidelines and a timetable for the distribution of SEC. 65. Conversion of Lands.¾After the lapse of five (5) years from its award, when
homelots to qualified [FWBs]; and the land ceases to be economically feasible and sound for agricultural purposes, or
the locality has become urbanized and the land will have a greater economic value for
6. That the 3% cash dividends mentioned in the [SDP] be expressly provided residential, commercial or industrial purposes, the DAR, upon application of the
for [in] the MOA. beneficiary or the landowner, with due notice to the affected parties, and subject to
existing laws, may authorize the reclassification, or conversion of the land and its
disposition: Provided, That the beneficiary shall have fully paid its obligation.
In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI
explained that the proposed revisions of the SDP are already embodied in both the
SDP and MOA.39 Following that exchange, the PARC, under then Sec. Defensor- The application, according to HLI, had the backing of 5,000 or so FWBs, including
Santiago, by Resolution No. 89-12-240 dated November 21, 1989, approved the SDP respondent Rene Galang, and Jose Julio Suniga, as evidenced by the Manifesto of
of Tadeco/HLI.41 Support they signed and which was submitted to the DAR.44After the usual
processing, the DAR, thru then Sec. Ernesto Garilao, approved the application on
August 14, 1996, per DAR Conversion Order No. 030601074-764-(95), Series of
At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, 1996,45 subject to payment of three percent (3%) of the gross selling price to the
more or less, composed of permanent, seasonal and casual master list/payroll and FWBs and to HLI’s continued compliance with its undertakings under the SDP,
non-master list members. among other conditions.

From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs: On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of
stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe converted area to the latter.46 Consequently, HLI’s Transfer Certificate of Title (TCT)
benefits No. 28791047 was canceled and TCT No. 29209148 was issued in the name of
Centennary. HLI transferred the remaining 200 hectares covered by TCT No. 287909
(b) 59 million shares of stock distributed for free to the FWBs; to Luisita Realty Corporation (LRC)49 in two separate transactions in 1997 and 1998,
both uniformly involving 100 hectares for PhP 250 million each. 50

(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;


Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided
into 12,100,000 shares and wholly-owned by HLI, had the following incorporators:
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Ernesto G. Teopaco, and
hectares of converted agricultural land of Hacienda Luisita; Bernardo R. Lahoz.

(e) 240-square meter homelots distributed for free; Subsequently, Centennary sold51 the entire 300 hectares to Luisita Industrial Park
Corporation (LIPCO) for PhP 750 million. The latter acquired it for the purpose of
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 developing an industrial complex.52 As a result, Centennary’s TCT No. 292091 was
hectares at 80 million pesos (P80,000,000) for the SCTEX; canceled to be replaced by TCT No. 31098653 in the name of LIPCO.

(g) Social service benefits, such as but not limited to free From the area covered by TCT No. 310986 was carved out two (2) parcels, for which
hospitalization/medical/maternity services, old age/death benefits and no two (2) separate titles were issued in the name of LIPCO, specifically: (a) TCT No.
interest bearing salary/educational loans and rice sugar accounts. 42 36580054 and (b) TCT No. 365801,55 covering 180 and four hectares, respectively.
TCT No. 310986 was, accordingly, partially canceled.
Two separate groups subsequently contested this claim of HLI.
Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO
transferred the parcels covered by its TCT Nos. 365800 and 365801 to the Rizal
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the
Commercial Banking Corporation (RCBC) by way of dacion en pago in payment of
hacienda from agricultural to industrial use,43 pursuant to Sec. 65 of RA 6657,
LIPCO’s PhP 431,695,732.10 loan obligations. LIPCO’s titles were canceled and new
providing:
ones, TCT Nos. 391051 and 391052, were issued to RCBC.
29

Apart from the 500 hectares alluded to, another 80.51 hectares were later detached compulsory acquisition scheme. Following review, the PARC Validation Committee
from the area coverage of Hacienda Luisita which had been acquired by the favorably endorsed the DAR Secretary’s recommendation afore-stated.67
government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. In
absolute terms, 4,335.75 hectares remained of the original 4,915 hectares Tadeco On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01,
ceded to HLI.56 disposing as follows:

Such, in short, was the state of things when two separate petitions, both undated, NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY
reached the DAR in the latter part of 2003. In the first, denominated as RESOLVED, to approve and confirm the recommendation of the PARC Executive
Petition/Protest,57 respondents Jose Julio Suniga and Windsor Andaya, identifying Committee adopting in toto the report of the PARC ExCom Validation Committee
themselves as head of the Supervisory Group of HLI (Supervisory Group), and 60 affirming the recommendation of the DAR to recall/revoke the SDO plan of Tarlac
other supervisors sought to revoke the SDOA, alleging that HLI had failed to give Development Corporation/Hacienda Luisita Incorporated.
them their dividends and the one percent (1%) share in gross sales, as well as the
thirty-three percent (33%) share in the proceeds of the sale of the converted 500
hectares of land. They further claimed that their lives have not improved contrary to RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI SDO
the promise and rationale for the adoption of the SDOA. They also cited violations by plan be forthwith placed under the compulsory coverage or mandated land acquisition
HLI of the SDOA’s terms.58 They prayed for a renegotiation of the SDOA, or, in the scheme of the [CARP].
alternative, its revocation.
APPROVED.68
Revocation and nullification of the SDOA and the distribution of the lands in the
hacienda were the call in the second petition, styled as Petisyon (Petition).59 The A copy of Resolution No. 2005-32-01 was served on HLI the following day, December
Petisyon was ostensibly filed on December 4, 2003 by Alyansa ng mga 23, without any copy of the documents adverted to in the resolution attached. A letter-
Manggagawang Bukid ng Hacienda Luisita (AMBALA), where the handwritten name request dated December 28, 200569 for certified copies of said documents was sent
of respondents Rene Galang as "Pangulo AMBALA" and Noel Mallari as "Sec-Gen. to, but was not acted upon by, the PARC secretariat.
AMBALA"60 appeared. As alleged, the petition was filed on behalf of AMBALA’s
members purportedly composing about 80% of the 5,339 FWBs of Hacienda Luisita. Therefrom, HLI, on January 2, 2006, sought reconsideration. 70 On the same day, the
DAR Tarlac provincial office issued the Notice of Coverage71 which HLI received on
HLI would eventually answer61 the petition/protest of the Supervisory Group. On the January 4, 2006.
other hand, HLI’s answer62 to the AMBALA petition was contained in its letter dated
January 21, 2005 also filed with DAR. Its motion notwithstanding, HLI has filed the instant recourse in light of what it
considers as the DAR’s hasty placing of Hacienda Luisita under CARP even before
Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to PARC could rule or even read the motion for reconsideration.72 As HLI later rued, it
the SDP of HLI. Among other duties, the Special Task Force was mandated to review "can not know from the above-quoted resolution the facts and the law upon which it is
the terms and conditions of the SDOA and PARC Resolution No. 89-12-2 relative to based."73
HLI’s SDP; evaluate HLI’s compliance reports; evaluate the merits of the petitions for
the revocation of the SDP; conduct ocular inspections or field investigations; and PARC would eventually deny HLI’s motion for reconsideration via Resolution No.
recommend appropriate remedial measures for approval of the Secretary. 63 2006-34-01 dated May 3, 2006.

After investigation and evaluation, the Special Task Force submitted its "Terminal By Resolution of June 14, 2006,74 the Court, acting on HLI’s motion, issued a
Report: Hacienda Luisita, Incorporated (HLI) Stock Distribution Plan (SDP) temporary restraining order,75enjoining the implementation of Resolution No. 2005-
Conflict"64 dated September 22, 2005 (Terminal Report), finding that HLI has not 32-01 and the notice of coverage.
complied with its obligations under RA 6657 despite the implementation of the
SDP.65 The Terminal Report and the Special Task Force’s recommendations were
adopted by then DAR Sec. Nasser Pangandaman (Sec. Pangandaman). 66 On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed its
Comment76 on the petition.
Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee
(Excom) (a) the recall/revocation of PARC Resolution No. 89-12-2 dated November On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his capacity
21, 1989 approving HLI’s SDP; and (b) the acquisition of Hacienda Luisita through the as "Sec-Gen. AMBALA," filed his Manifestation and Motion with Comment Attached
30

dated December 4, 2006 (Manifestation and Motion). 77 In it, Mallari stated that he has I.
broken away from AMBALA with other AMBALA ex-members and formed
Farmworkers Agrarian Reform Movement, Inc. (FARM).78 Should this shift in alliance WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY
deny him standing, Mallari also prayed that FARM be allowed to intervene. PANGANDAMAN HAVE JURISDICTION, POWER AND/OR AUTHORITY
TO NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA.
As events would later develop, Mallari had a parting of ways with other FARM
members, particularly would-be intervenors Renato Lalic, et al. As things stand, II.
Mallari returned to the AMBALA fold, creating the AMBALA-Noel Mallari faction and
leaving Renato Lalic, et al. as the remaining members of FARM who sought to
intervene. [IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION,
POWER AND/OR AUTHORITY AT THIS TIME, I.E., AFTER SIXTEEN (16)
YEARS FROM THE EXECUTION OF THE SDOA AND ITS
On January 10, 2007, the Supervisory Group79 and the AMBALA-Rene Galang IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10 OF
faction submitted their Comment/Opposition dated December 17, 2006.80 ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION AGAINST
DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW AND
On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File and THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND OBLIGATIONS?
Admit Attached Petition-In-Intervention dated October 18, 2007.81 LIPCO later MOREOVER, ARE THERE LEGAL GROUNDS UNDER THE CIVIL
followed with a similar motion.82 In both motions, RCBC and LIPCO contended that CODE, viz, ARTICLE 1191 x x x, ARTICLES 1380, 1381 AND 1382 x x x
the assailed resolution effectively nullified the TCTs under their respective names as ARTICLE 1390 x x x AND ARTICLE 1409 x x x THAT CAN BE INVOKED
the properties covered in the TCTs were veritably included in the January 2, 2006 TO NULLIFY, RECALL, REVOKE, OR RESCIND THE SDOA?
notice of coverage. In the main, they claimed that the revocation of the SDP cannot
legally affect their rights as innocent purchasers for value. Both motions for leave to III.
intervene were granted and the corresponding petitions-in-intervention admitted.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR
On August 18, 2010, the Court heard the main and intervening petitioners on oral RESCIND THE SDOA HAVE ANY LEGAL BASIS OR GROUNDS AND
arguments. On the other hand, the Court, on August 24, 2010, heard public WHETHER THE PETITIONERS THEREIN ARE THE REAL PARTIES-IN-
respondents as well as the respective counsels of the AMBALA-Mallari-Supervisory INTEREST TO FILE SAID PETITIONS.
Group, the AMBALA-Galang faction, and the FARM and its 27 members 83 argue their
case.
IV.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the
Supervisory Group, represented by Suniga and Andaya; and the United Luisita WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE
Workers Union, represented by Eldifonso Pingol, filed with the Court a joint PARTIES TO THE SDOA ARE NOW GOVERNED BY THE
submission and motion for approval of a Compromise Agreement (English and CORPORATION CODE (BATAS PAMBANSA BLG. 68) AND NOT BY THE
Tagalog versions) dated August 6, 2010. x x x [CARL] x x x.

On August 31, 2010, the Court, in a bid to resolve the dispute through an amicable On the other hand, RCBC submits the following issues:
settlement, issued a Resolution84 creating a Mediation Panel composed of then
Associate Justice Ma. Alicia Austria-Martinez, as chairperson, and former CA Justices I.
Hector Hofileña and Teresita Dy-Liacco Flores, as members. Meetings on five (5)
separate dates, i.e., September 8, 9, 14, 20, and 27, 2010, were conducted. Despite RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION
persevering and painstaking efforts on the part of the panel, mediation had to be AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DID
discontinued when no acceptable agreement could be reached. NOT EXCLUDE THE SUBJECT PROPERTY FROM THE COVERAGE OF
THE CARP DESPITE THE FACT THAT PETITIONER-INTERVENOR RCBC
The Issues HAS ACQUIRED VESTED RIGHTS AND INDEFEASIBLE TITLE OVER
THE SUBJECT PROPERTY AS AN INNOCENT PURCHASER FOR
HLI raises the following issues for our consideration: VALUE.
31

A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE Galang, who filed the revocatory petitions before the DAR. As HLI would have it,
NOTICE OF COVERAGE DATED 02 JANUARY 2006 HAVE THE Galang, the self-styled head of AMBALA, gained HLI employment in June 1990 and,
EFFECT OF NULLIFYING TCT NOS. 391051 AND 391052 IN THE thus, could not have been a party to the SDOA executed a year earlier.85 As regards
NAME OF PETITIONER-INTERVENOR RCBC. the Supervisory Group, HLI alleges that supervisors are not regular farmworkers, but
the company nonetheless considered them FWBs under the SDOA as a mere
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONER- concession to enable them to enjoy the same benefits given qualified regular
INTERVENOR RCBC CANNOT BE PREJUDICED BY A farmworkers. However, if the SDOA would be canceled and land distribution effected,
SUBSEQUENT REVOCATION OR RESCISSION OF THE SDOA. so HLI claims, citing Fortich v. Corona,86 the supervisors would be excluded from
receiving lands as farmworkers other than the regular farmworkers who are merely
entitled to the "fruits of the land."87
II.
The SDOA no less identifies "the SDP qualified beneficiaries" as "the farmworkers
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF who appear in the annual payroll, inclusive of the permanent and seasonal
COVERAGE DATED 02 JANUARY 2006 WERE ISSUED WITHOUT employees, who are regularly or periodically employed by [HLI]." 88 Galang, per HLI’s
AFFORDING PETITIONER-INTERVENOR RCBC ITS RIGHT TO DUE own admission, is employed by HLI, and is, thus, a qualified beneficiary of the SDP;
PROCESS AS AN INNOCENT PURCHASER FOR VALUE. he comes within the definition of a real party-in-interest under Sec. 2, Rule 3 of the
Rules of Court, meaning, one who stands to be benefited or injured by the judgment
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over in the suit or is the party entitled to the avails of the suit.
certain portions of the converted property, and, hence, would ascribe on PARC the
commission of grave abuse of discretion when it included those portions in the notice The same holds true with respect to the Supervisory Group whose members were
of coverage. And apart from raising issues identical with those of HLI, such as but not admittedly employed by HLI and whose names and signatures even appeared in the
limited to the absence of valid grounds to warrant the rescission and/or revocation of annex of the SDOA. Being qualified beneficiaries of the SDP, Suniga and the other 61
the SDP, LIPCO would allege that the assailed resolution and the notice of coverage supervisors are certainly parties who would benefit or be prejudiced by the judgment
were issued without affording it the right to due process as an innocent purchaser for recalling the SDP or replacing it with some other modality to comply with RA 6657.
value. The government, LIPCO also argues, is estopped from recovering properties
which have since passed to innocent parties.
Even assuming that members of the Supervisory Group are not regular farmworkers,
but are in the category of "other farmworkers" mentioned in Sec. 4, Article XIII of the
Simply formulated, the principal determinative issues tendered in the main petition Constitution,89 thus only entitled to a share of the fruits of the land, as indeed Fortich
and to which all other related questions must yield boil down to the following: (1) teaches, this does not detract from the fact that they are still identified as being
matters of standing; (2) the constitutionality of Sec. 31 of RA 6657; (3) the jurisdiction among the "SDP qualified beneficiaries." As such, they are, thus, entitled to bring an
of PARC to recall or revoke HLI’s SDP; (4) the validity or propriety of such recall or action upon the SDP.90 At any rate, the following admission made by Atty. Gener
revocatory action; and (5) corollary to (4), the validity of the terms and conditions of Asuncion, counsel of HLI, during the oral arguments should put to rest any lingering
the SDP, as embodied in the SDOA. doubt as to the status of protesters Galang, Suniga, and Andaya:

Our Ruling Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified
farmer beneficiaries of Hacienda Luisita were real parties in interest?
I.
Atty. Asuncion: Yes, Your Honor please, real party in interest which that question
We first proceed to the examination of the preliminary issues before delving on the refers to the complaints of protest initiated before the DAR and the real party in
more serious challenges bearing on the validity of PARC’s assailed issuance and the interest there be considered as possessed by the farmer beneficiaries who initiated
grounds for it. the protest.91

Supervisory Group, AMBALA and their Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly
respective leaders are real parties-in-interest allowed to represent themselves, their fellow farmers or their organizations in any
proceedings before the DAR. Specifically:
HLI would deny real party-in-interest status to the purported leaders of the
Supervisory Group and AMBALA, i.e., Julio Suniga, Windsor Andaya, and Rene SEC. 50. Quasi-Judicial Powers of the DAR.¾x x x
32

xxxx terms."95 Further, "every statutory grant of power, right or privilege is deemed to
include all incidental power, right or privilege.96
Responsible farmer leaders shall be allowed to represent themselves, their
fellow farmers or their organizations in any proceedings before the DAR: Gordon v. Veridiano II is instructive:
Provided, however, that when there are two or more representatives for any individual
or group, the representatives should choose only one among themselves to represent The power to approve a license includes by implication, even if not expressly granted,
such party or group before any DAR proceedings. (Emphasis supplied.) the power to revoke it. By extension, the power to revoke is limited by the authority to
grant the license, from which it is derived in the first place. Thus, if the FDA grants a
Clearly, the respective leaders of the Supervisory Group and AMBALA are license upon its finding that the applicant drug store has complied with the
contextually real parties-in-interest allowed by law to file a petition before the DAR or requirements of the general laws and the implementing administrative rules and
PARC. regulations, it is only for their violation that the FDA may revoke the said license. By
the same token, having granted the permit upon his ascertainment that the conditions
This is not necessarily to say, however, that Galang represents AMBALA, for as thereof as applied x x x have been complied with, it is only for the violation of such
records show and as HLI aptly noted,92 his "petisyon" filed with DAR did not carry the conditions that the mayor may revoke the said permit. 97 (Emphasis supplied.)
usual authorization of the individuals in whose behalf it was supposed to have been
instituted. To date, such authorization document, which would logically include a list Following the doctrine of necessary implication, it may be stated that the conferment
of the names of the authorizing FWBs, has yet to be submitted to be part of the of express power to approve a plan for stock distribution of the agricultural land of
records. corporate owners necessarily includes the power to revoke or recall the approval of
the plan.
PARC’s Authority to Revoke a Stock Distribution Plan
As public respondents aptly observe, to deny PARC such revocatory power would
On the postulate that the subject jurisdiction is conferred by law, HLI maintains that reduce it into a toothless agency of CARP, because the very same agency tasked to
PARC is without authority to revoke an SDP, for neither RA 6657 nor EO 229 ensure compliance by the corporate landowner with the approved SDP would be
expressly vests PARC with such authority. While, as HLI argued, EO 229 empowers without authority to impose sanctions for non-compliance with it.98 With the view We
PARC to approve the plan for stock distribution in appropriate cases, the take of the case, only PARC can effect such revocation. The DAR Secretary, by his
empowerment only includes the power to disapprove, but not to recall its previous own authority as such, cannot plausibly do so, as the acceptance and/or approval of
approval of the SDP after it has been implemented by the parties.93 To HLI, it is the the SDP sought to be taken back or undone is the act of PARC whose official
court which has jurisdiction and authority to order the revocation or rescission of the composition includes, no less, the President as chair, the DAR Secretary as vice-
PARC-approved SDP. chair, and at least eleven (11) other department heads. 99

We disagree. On another but related issue, the HLI foists on the Court the argument that subjecting
its landholdings to compulsory distribution after its approved SDP has been
implemented would impair the contractual obligations created under the SDOA.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the
plan for stock distribution of the corporate landowner belongs to PARC. However,
contrary to petitioner HLI’s posture, PARC also has the power to revoke the SDP The broad sweep of HLI’s argument ignores certain established legal precepts and
which it previously approved. It may be, as urged, that RA 6657 or other executive must, therefore, be rejected.
issuances on agrarian reform do not explicitly vest the PARC with the power to
revoke/recall an approved SDP. Such power or authority, however, is deemed A law authorizing interference, when appropriate, in the contractual relations between
possessed by PARC under the principle of necessary implication, a basic postulate or among parties is deemed read into the contract and its implementation cannot
that what is implied in a statute is as much a part of it as that which is expressed. 94 successfully be resisted by force of the non-impairment guarantee. There is, in that
instance, no impingement of the impairment clause, the non-impairment protection
We have explained that "every statute is understood, by implication, to contain all being applicable only to laws that derogate prior acts or contracts by enlarging,
such provisions as may be necessary to effectuate its object and purpose, or to make abridging or in any manner changing the intention of the parties. Impairment, in fine,
effective rights, powers, privileges or jurisdiction which it grants, including all such obtains if a subsequent law changes the terms of a contract between the parties,
collateral and subsidiary consequences as may be fairly and logically inferred from its imposes new conditions, dispenses with those agreed upon or withdraws existing
remedies for the enforcement of the rights of the parties.100 Necessarily, the
constitutional proscription would not apply to laws already in effect at the time of
33

contract execution, as in the case of RA 6657, in relation to DAO 10, vis-à-vis HLI’s prevail—generalia specialibus non derogant.105 Besides, the present impasse
SDOA. As held in Serrano v. Gallant Maritime Services, Inc.: between HLI and the private respondents is not an intra-corporate dispute which
necessitates the application of the Corporation Code. What private respondents
The prohibition [against impairment of the obligation of contracts] is aligned with the questioned before the DAR is the proper implementation of the SDP and HLI’s
general principle that laws newly enacted have only a prospective operation, and compliance with RA 6657. Evidently, RA 6657 should be the applicable law to the
cannot affect acts or contracts already perfected; however, as to laws already in instant case.
existence, their provisions are read into contracts and deemed a part thereof. Thus,
the non-impairment clause under Section 10, Article II [of the Constitution] is limited in HLI further contends that the inclusion of the agricultural land of Hacienda Luisita
application to laws about to be enacted that would in any way derogate from existing under the coverage of CARP and the eventual distribution of the land to the FWBs
acts or contracts by enlarging, abridging or in any manner changing the intention of would amount to a disposition of all or practically all of the corporate assets of HLI.
the parties thereto.101 (Emphasis supplied.) HLI would add that this contingency, if ever it comes to pass, requires the applicability
of the Corporation Code provisions on corporate dissolution.
Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of
issuance within the ambit of Sec. 10, Art. III of the Constitution providing that "[n]o law We are not persuaded.
impairing the obligation of contracts shall be passed."
Indeed, the provisions of the Corporation Code on corporate dissolution would apply
Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as such, a insofar as the winding up of HLI’s affairs or liquidation of the assets is concerned.
breach of its terms and conditions is not a PARC administrative matter, but one that However, the mere inclusion of the agricultural land of Hacienda Luisita under the
gives rise to a cause of action cognizable by regular courts. 102 This contention has coverage of CARP and the land’s eventual distribution to the FWBs will not, without
little to commend itself. The SDOA is a special contract imbued with public interest, more, automatically trigger the dissolution of HLI. As stated in the SDOA itself, the
entered into and crafted pursuant to the provisions of RA 6657. It embodies the SDP, percentage of the value of the agricultural land of Hacienda Luisita in relation to the
which requires for its validity, or at least its enforceability, PARC’s approval. And the total assets transferred and conveyed by Tadeco to HLI comprises only 33.296%,
fact that the certificate of compliance103––to be issued by agrarian authorities upon following this equation: value of the agricultural lands divided by total corporate
completion of the distribution of stocks––is revocable by the same issuing authority assets. By no stretch of imagination would said percentage amount to a disposition of
supports the idea that everything about the implementation of the SDP is, at the first all or practically all of HLI’s corporate assets should compulsory land acquisition and
instance, subject to administrative adjudication. distribution ensue.

HLI also parlays the notion that the parties to the SDOA should now look to the This brings us to the validity of the revocation of the approval of the SDP sixteen (16)
Corporation Code, instead of to RA 6657, in determining their rights, obligations and years after its execution pursuant to Sec. 31 of RA 6657 for the reasons set forth in
remedies. The Code, it adds, should be the applicable law on the disposition of the the Terminal Report of the Special Task Force, as endorsed by PARC Excom. But
agricultural land of HLI. first, the matter of the constitutionality of said section.

Contrary to the view of HLI, the rights, obligations and remedies of the parties to the Constitutional Issue
SDOA embodying the SDP are primarily governed by RA 6657. It should abundantly
be made clear that HLI was precisely created in order to comply with RA 6657, which FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the
the OSG aptly described as the "mother law" of the SDOA and the SDP. 104 It is, thus, corporation, as a mode of CARP compliance, to resort to stock distribution, an
paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive arrangement which, to FARM, impairs the fundamental right of farmers and
applicability of the Corporation Code under the guise of being a corporate entity. farmworkers under Sec. 4, Art. XIII of the Constitution.106

Without in any way minimizing the relevance of the Corporation Code since the FWBs To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657 permits
of HLI are also stockholders, its applicability is limited as the rights of the parties stock transfer in lieu of outright agricultural land transfer; in fine, there is stock
arising from the SDP should not be made to supplant or circumvent the agrarian certificate ownership of the farmers or farmworkers instead of them owning the land,
reform program. as envisaged in the Constitution. For FARM, this modality of distribution is an
anomaly to be annulled for being inconsistent with the basic concept of agrarian
Without doubt, the Corporation Code is the general law providing for the formation, reform ingrained in Sec. 4, Art. XIII of the Constitution.107
organization and regulation of private corporations. On the other hand, RA 6657 is the
special law on agrarian reform. As between a general and special law, the latter shall
34

Reacting, HLI insists that agrarian reform is not only about transfer of land ownership It has been emphasized in a number of cases that the question of constitutionality will
to farmers and other qualified beneficiaries. It draws attention in this regard to Sec. not be passed upon by the Court unless it is properly raised and presented in an
3(a) of RA 6657 on the concept and scope of the term "agrarian reform." The appropriate case at the first opportunity.109 FARM is, therefore, remiss in belatedly
constitutionality of a law, HLI added, cannot, as here, be attacked collaterally. questioning the constitutionality of Sec. 31 of RA 6657. The second requirement that
the constitutional question should be raised at the earliest possible opportunity is
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and necessarily clearly wanting.
its counterpart provision in EO 229 must fail as explained below.
The last but the most important requisite that the constitutional issue must be the very
When the Court is called upon to exercise its power of judicial review over, and pass lis mota of the case does not likewise obtain. The lis mota aspect is not present, the
upon the constitutionality of, acts of the executive or legislative departments, it does constitutional issue tendered not being critical to the resolution of the case. The
so only when the following essential requirements are first met, to wit: unyielding rule has been to avoid, whenever plausible, an issue assailing the
constitutionality of a statute or governmental act.110 If some other grounds exist by
which judgment can be made without touching the constitutionality of a law, such
(1) there is an actual case or controversy; recourse is favored.111 Garcia v. Executive Secretary explains why:

(2) that the constitutional question is raised at the earliest possible Lis Mota — the fourth requirement to satisfy before this Court will undertake judicial
opportunity by a proper party or one with locus standi; and review — means that the Court will not pass upon a question of unconstitutionality,
although properly presented, if the case can be disposed of on some other ground,
(3) the issue of constitutionality must be the very lis mota of the case.108 such as the application of the statute or the general law. The petitioner must be able
to show that the case cannot be legally resolved unless the constitutional question
Not all the foregoing requirements are satisfied in the case at bar. raised is determined. This requirement is based on the rule that every law has in its
favor the presumption of constitutionality; to justify its nullification, there must be a
clear and unequivocal breach of the Constitution, and not one that is doubtful,
While there is indeed an actual case or controversy, intervenor FARM, composed of a speculative, or argumentative.112 (Italics in the original.)
small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 3l of RA 6657, since as early as November 21, l989 when
PARC approved the SDP of Hacienda Luisita or at least within a reasonable time The lis mota in this case, proceeding from the basic positions originally taken by
thereafter and why its members received benefits from the SDP without so much of a AMBALA (to which the FARM members previously belonged) and the Supervisory
protest. It was only on December 4, 2003 or 14 years after approval of the SDP via Group, is the alleged non-compliance by HLI with the conditions of the SDP to
PARC Resolution No. 89-12-2 dated November 21, 1989 that said plan and support a plea for its revocation. And before the Court, the lis mota is whether or not
approving resolution were sought to be revoked, but not, to stress, by FARM or any of PARC acted in grave abuse of discretion when it ordered the recall of the SDP for
its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT such non-compliance and the fact that the SDP, as couched and implemented,
question the constitutionality of Sec. 31 of RA 6657, but concentrated on the offends certain constitutional and statutory provisions. To be sure, any of these key
purported flaws and gaps in the subsequent implementation of the SDP. Even the issues may be resolved without plunging into the constitutionality of Sec. 31 of RA
public respondents, as represented by the Solicitor General, did not question the 6657. Moreover, looking deeply into the underlying petitions of AMBALA, et al., it is
constitutionality of the provision. On the other hand, FARM, whose 27 members not the said section per se that is invalid, but rather it is the alleged application of the
formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3, said provision in the SDP that is flawed.
2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM
some eighteen (18) years from November 21, 1989 before it challenged the It may be well to note at this juncture that Sec. 5 of RA 9700,113 amending Sec. 7 of
constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM RA 6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock distribution
members slept on their rights and even accepted benefits from the SDP with nary a component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: "[T]hat
complaint on the alleged unconstitutionality of Sec. 31 upon which the benefits were after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to
derived. The Court cannot now be goaded into resolving a constitutional issue that sell and compulsory acquisition." Thus, for all intents and purposes, the stock
FARM failed to assail after the lapse of a long period of time and the occurrence of distribution scheme under Sec. 31 of RA 6657 is no longer an available option under
numerous events and activities which resulted from the application of an alleged existing law. The question of whether or not it is unconstitutional should be a moot
unconstitutional legal provision. issue.
35

It is true that the Court, in some cases, has proceeded to resolve constitutional issues SEC. 29. Farms owned or operated by corporations or other business associations.—
otherwise already moot and academic114 provided the following requisites are In the case of farms owned or operated by corporations or other business
present: associations, the following rules shall be observed by the PARC.

x x x first, there is a grave violation of the Constitution; second, the exceptional In general, lands shall be distributed directly to the individual worker-beneficiaries.
character of the situation and the paramount public interest is involved; third, when
the constitutional issue raised requires formulation of controlling principles to guide In case it is not economically feasible and sound to divide the land, then it shall be
the bench, the bar, and the public; fourth, the case is capable of repetition yet evading owned collectively by the worker beneficiaries who shall form a workers’ cooperative
review. or association which will deal with the corporation or business association. x x x
(Emphasis supplied.)
These requisites do not obtain in the case at bar.
SEC. 31. Corporate Landowners.— x x x
For one, there appears to be no breach of the fundamental law. Sec. 4, Article XIII of
the Constitution reads: xxxx

The State shall, by law, undertake an agrarian reform program founded on the right of Upon certification by the DAR, corporations owning agricultural lands may give their
the farmers and regular farmworkers, who are landless, to OWN directly or qualified beneficiaries the right to purchase such proportion of the capital stock of the
COLLECTIVELY THE LANDS THEY TILL or, in the case of other farmworkers, to corporation that the agricultural land, actually devoted to agricultural activities, bears
receive a just share of the fruits thereof. To this end, the State shall encourage and in relation to the company’s total assets, under such terms and conditions as may be
undertake the just distribution of all agricultural lands, subject to such priorities and agreed upon by them. In no case shall the compensation received by the workers at
reasonable retention limits as the Congress may prescribe, taking into account the time the shares of stocks are distributed be reduced. The same principle shall be
ecological, developmental, or equity considerations, and subject to the payment of applied to associations, with respect to their equity or participation. x x x (Emphasis
just compensation. In determining retention limits, the State shall respect the right of supplied.)
small landowners. The State shall further provide incentives for voluntary land-
sharing. (Emphasis supplied.)
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and
corporations or associations under the succeeding Sec. 31, as differentiated from
The wording of the provision is unequivocal––the farmers and regular farmworkers individual farmers, are authorized vehicles for the collective ownership of agricultural
have a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The land. Cooperatives can be registered with the Cooperative Development Authority
basic law allows two (2) modes of land distribution—direct and indirect ownership. and acquire legal personality of their own, while corporations are juridical persons
Direct transfer to individual farmers is the most commonly used method by DAR and under the Corporation Code. Thus, Sec. 31 is constitutional as it simply implements
widely accepted. Indirect transfer through collective ownership of the agricultural land Sec. 4 of Art. XIII of the Constitution that land can be owned COLLECTIVELY by
is the alternative to direct ownership of agricultural land by individual farmers. The farmers. Even the framers of the l987 Constitution are in unison with respect to the
aforequoted Sec. 4 EXPRESSLY authorizes collective ownership by farmers. No two (2) modes of ownership of agricultural lands tilled by farmers––DIRECT and
language can be found in the 1987 Constitution that disqualifies or prohibits COLLECTIVE, thus:
corporations or cooperatives of farmers from being the legal entity through which
collective ownership can be exercised. The word "collective" is defined as "indicating
a number of persons or things considered as constituting one group or MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean the
aggregate,"115 while "collectively" is defined as "in a collective sense or manner; in a principle of direct ownership by the tiller?
mass or body."116 By using the word "collectively," the Constitution allows for indirect
ownership of land and not just outright agricultural land transfer. This is in recognition MR. MONSOD. Yes.
of the fact that land reform may become successful even if it is done through the
medium of juridical entities composed of farmers. MR. NOLLEDO. And when we talk of "collectively," we mean communal ownership,
stewardship or State ownership?
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows
workers’ cooperatives or associations to collectively own the land, while the second MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’ cooperatives
paragraph of Sec. 31 allows corporations or associations to own agricultural land with owning the land, not the State.
the farmers becoming stockholders or members. Said provisions read:
36

MR. NOLLEDO. And when we talk of "collectively," referring to farmers’ cooperatives, lift the economic status of the beneficiaries and all other arrangements alternative
do the farmers own specific areas of land where they only unite in their efforts? to the physical redistribution of lands, such as production or profit sharing, labor
administration and the distribution of shares of stock which will allow beneficiaries
MS. NIEVA. That is one way. to receive a just share of the fruits of the lands they work."

MR. NOLLEDO. Because I understand that there are two basic systems involved: the With the view We take of this case, the stock distribution option devised under Sec.
"moshave" type of agriculture and the "kibbutz." So are both contemplated in the 31 of RA 6657 hews with the agrarian reform policy, as instrument of social justice
report? under Sec. 4 of Article XIII of the Constitution. Albeit land ownership for the landless
appears to be the dominant theme of that policy, We emphasize that Sec. 4, Article
XIII of the Constitution, as couched, does not constrict Congress to passing an
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na agrarian reform law planted on direct land transfer to and ownership by farmers and
reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na no other, or else the enactment suffers from the vice of unconstitutionality. If the
pagmamay-ari – directly – at ang tinatawag na sama-samang gagawin ng mga intention were otherwise, the framers of the Constitution would have worded said
magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila itong section in a manner mandatory in character.
"cooperative or collective farm." Ang ibig sabihin ay sama-sama nilang sasakahin.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not
xxxx inconsistent with the State’s commitment to farmers and farmworkers to advance their
interests under the policy of social justice. The legislature, thru Sec. 31 of RA 6657,
MR. TINGSON. x x x When we speak here of "to own directly or collectively the lands has chosen a modality for collective ownership by which the imperatives of social
they till," is this land for the tillers rather than land for the landless? Before, we used to justice may, in its estimation, be approximated, if not achieved. The Court should be
hear "land for the landless," but now the slogan is "land for the tillers." Is that right? bound by such policy choice.

MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin FARM contends that the farmers in the stock distribution scheme under Sec. 31 do
ng "directly" ay tulad sa implementasyon sa rice and corn lands kung saan inaari na not own the agricultural land but are merely given stock certificates. Thus, the farmers
ng mga magsasaka ang lupang binubungkal nila. Ang ibig sabihin naman ng lose control over the land to the board of directors and executive officials of the
"collectively" ay sama-samang paggawa sa isang lupain o isang bukid, katulad ng corporation who actually manage the land. They conclude that such arrangement
sitwasyon sa Negros.117 (Emphasis supplied.) runs counter to the mandate of the Constitution that any agrarian reform must
preserve the control over the land in the hands of the tiller.
As Commissioner Tadeo explained, the farmers will work on the agricultural land
"sama-sama" or collectively. Thus, the main requisite for collective ownership of land This contention has no merit.
is collective or group work by farmers of the agricultural land. Irrespective of whether
the landowner is a cooperative, association or corporation composed of farmers, as While it is true that the farmer is issued stock certificates and does not directly own
long as concerted group work by the farmers on the land is present, then it falls within the land, still, the Corporation Code is clear that the FWB becomes a stockholder who
the ambit of collective ownership scheme. acquires an equitable interest in the assets of the corporation, which include the
agricultural lands. It was explained that the "equitable interest of the shareholder in
Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment on the the property of the corporation is represented by the term stock, and the extent of his
part of the State to pursue, by law, an agrarian reform program founded on the policy interest is described by the term shares. The expression shares of stock when
of land for the landless, but subject to such priorities as Congress may prescribe, qualified by words indicating number and ownership expresses the extent of the
taking into account such abstract variable as "equity considerations." The textual owner’s interest in the corporate property."119 A share of stock typifies an aliquot part
reference to a law and Congress necessarily implies that the above constitutional of the corporation’s property, or the right to share in its proceeds to that extent when
provision is not self-executoryand that legislation is needed to implement the distributed according to law and equity and that its holder is not the owner of any part
urgently needed program of agrarian reform. And RA 6657 has been enacted of the capital of the corporation.120 However, the FWBs will ultimately own the
precisely pursuant to and as a mechanism to carry out the constitutional directives. agricultural lands owned by the corporation when the corporation is eventually
This piece of legislation, in fact, restates118 the agrarian reform policy established in dissolved and liquidated.
the aforementioned provision of the Constitution of promoting the welfare of landless
farmers and farmworkers. RA 6657 thus defines "agrarian reform" as "the Anent the alleged loss of control of the farmers over the agricultural land operated
redistribution of lands … to farmers and regular farmworkers who are landless … to and managed by the corporation, a reading of the second paragraph of Sec. 31
37

shows otherwise. Said provision provides that qualified beneficiaries have "the right to market roads, among others. Thus, at the end of the day, there is still no successful
purchase such proportion of the capital stock of the corporation that the agricultural implementation of agrarian reform to speak of in such a case.
land, actually devoted to agricultural activities, bears in relation to the company’s total
assets." The wording of the formula in the computation of the number of shares that Although success is not guaranteed, a cooperative or a corporation stands in a better
can be bought by the farmers does not mean loss of control on the part of the position to secure funding and competently maintain the agri-business than the
farmers. It must be remembered that the determination of the percentage of the individual farmer. While direct singular ownership over farmland does offer
capital stock that can be bought by the farmers depends on the value of the advantages, such as the ability to make quick decisions unhampered by interference
agricultural land and the value of the total assets of the corporation. from others, yet at best, these advantages only but offset the disadvantages that are
often associated with such ownership arrangement. Thus, government must be
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The flexible and creative in its mode of implementation to better its chances of success.
policy on agrarian reform is that control over the agricultural land must always be in One such option is collective ownership through juridical persons composed of
the hands of the farmers. Then it falls on the shoulders of DAR and PARC to see to it farmers.
the farmers should always own majority of the common shares entitled to elect the
members of the board of directors to ensure that the farmers will have a clear majority Aside from the fact that there appears to be no violation of the Constitution, the
in the board. Before the SDP is approved, strict scrutiny of the proposed SDP must requirement that the instant case be capable of repetition yet evading review is also
always be undertaken by the DAR and PARC, such that the value of the agricultural wanting. It would be speculative for this Court to assume that the legislature will enact
land contributed to the corporation must always be more than 50% of the total assets another law providing for a similar stock option.
of the corporation to ensure that the majority of the members of the board of directors
are composed of the farmers. The PARC composed of the President of the
Philippines and cabinet secretaries must see to it that control over the board of As a matter of sound practice, the Court will not interfere inordinately with the
directors rests with the farmers by rejecting the inclusion of non-agricultural assets exercise by Congress of its official functions, the heavy presumption being that a law
which will yield the majority in the board of directors to non-farmers. Any deviation, is the product of earnest studies by Congress to ensure that no constitutional
however, by PARC or DAR from the correct application of the formula prescribed by prescription or concept is infringed.121 Corollarily, courts will not pass upon questions
the second paragraph of Sec. 31 of RA 6675 does not make said provision of wisdom, expediency and justice of legislation or its provisions. Towards this end, all
constitutionally infirm. Rather, it is the application of said provision that can be reasonable doubts should be resolved in favor of the constitutionality of a law and the
challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of validity of the acts and processes taken pursuant thereof. 122
ensuring control by the farmers.
Consequently, before a statute or its provisions duly challenged are voided, an
A view has been advanced that there can be no agrarian reform unless there is land unequivocal breach of, or a clear conflict with the Constitution, not merely a doubtful
distribution and that actual land distribution is the essential characteristic of a or argumentative one, must be demonstrated in such a manner as to leave no doubt
constitutional agrarian reform program. On the contrary, there have been so many in the mind of the Court. In other words, the grounds for nullity must be beyond
instances where, despite actual land distribution, the implementation of agrarian reasonable doubt.123 FARM has not presented compelling arguments to overcome
reform was still unsuccessful. As a matter of fact, this Court may take judicial notice of the presumption of constitutionality of Sec. 31 of RA 6657.
cases where FWBs sold the awarded land even to non-qualified persons and in
violation of the prohibition period provided under the law. This only proves to show The wisdom of Congress in allowing an SDP through a corporation as an alternative
that the mere fact that there is land distribution does not guarantee a successful mode of implementing agrarian reform is not for judicial determination. Established
implementation of agrarian reform. jurisprudence tells us that it is not within the province of the Court to inquire into the
wisdom of the law, for, indeed, We are bound by words of the statute. 124
As it were, the principle of "land to the tiller" and the old pastoral model of land
ownership where non-human juridical persons, such as corporations, were prohibited II.
from owning agricultural lands are no longer realistic under existing conditions.
Practically, an individual farmer will often face greater disadvantages and difficulties The stage is now set for the determination of the propriety under the premises of the
than those who exercise ownership in a collective manner through a cooperative or revocation or recall of HLI’s SDP. Or to be more precise, the inquiry should be:
corporation. The former is too often left to his own devices when faced with failing whether or not PARC gravely abused its discretion in revoking or recalling the subject
crops and bad weather, or compelled to obtain usurious loans in order to purchase SDP and placing the hacienda under CARP’s compulsory acquisition and distribution
costly fertilizers or farming equipment. The experiences learned from failed land scheme.
reform activities in various parts of the country are lack of financing, lack of farm
equipment, lack of fertilizers, lack of guaranteed buyers of produce, lack of farm-to-
38

The findings, analysis and recommendation of the DAR’s Special Task Force The petition is not impressed with merit.
contained and summarized in its Terminal Report provided the bases for the assailed
PARC revocatory/recalling Resolution. The findings may be grouped into two: (1) the In the Terminal Report adopted by PARC, it is stated that the SDP violates the
SDP is contrary to either the policy on agrarian reform, Sec. 31 of RA 6657, or DAO agrarian reform policy under Sec. 2 of RA 6657, as the said plan failed to enhance
10; and (2) the alleged violation by HLI of the conditions/terms of the SDP. In more the dignity and improve the quality of lives of the FWBs through greater productivity of
particular terms, the following are essentially the reasons underpinning PARC’s agricultural lands. We disagree.
revocatory or recall action:
Sec. 2 of RA 6657 states:
(1) Despite the lapse of 16 years from the approval of HLI’s SDP, the lives of
the FWBs have hardly improved and the promised increased income has not
materialized; SECTION 2. Declaration of Principles and Policies.¾It is the policy of the State to
pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the
landless farmers and farm workers will receive the highest consideration to promote
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented; social justice and to move the nation towards sound rural development and
industrialization, and the establishment of owner cultivatorship of economic-sized
(3) The issuance of HLI shares of stock on the basis of number of hours farms as the basis of Philippine agriculture.
worked––or the so-called "man days"––is grossly onerous to the FWBs, as
HLI, in the guise of rotation, can unilaterally deny work to anyone. In To this end, a more equitable distribution and ownership of land, with due regard to
elaboration of this ground, PARC’s Resolution No. 2006-34-01, denying the rights of landowners to just compensation and to the ecological needs of the
HLI’s motion for reconsideration of Resolution No. 2005-32-01, stated that nation, shall be undertaken to provide farmers and farm workers with the opportunity
the man days criterion worked to dilute the entitlement of the original share to enhance their dignity and improve the quality of their lives through greater
beneficiaries;125 productivity of agricultural lands.

(4) The distribution/transfer of shares was not in accordance with the The agrarian reform program is founded on the right of farmers and regular farm
timelines fixed by law; workers, who are landless, to own directly or collectively the lands they till or, in the
case of other farm workers, to receive a share of the fruits thereof. To this end, the
(5) HLI has failed to comply with its obligations to grant 3% of the gross State shall encourage the just distribution of all agricultural lands, subject to the
sales every year as production-sharing benefit on top of the workers’ salary; priorities and retention limits set forth in this Act, having taken into account ecological,
and developmental, and equity considerations, and subject to the payment of just
compensation. The State shall respect the right of small landowners and shall provide
(6) Several homelot awardees have yet to receive their individual titles. incentives for voluntary land-sharing. (Emphasis supplied.)

Petitioner HLI claims having complied with, at least substantially, all its obligations Paragraph 2 of the above-quoted provision specifically mentions that "a more
under the SDP, as approved by PARC itself, and tags the reasons given for the equitable distribution and ownership of land x x x shall be undertaken to provide
revocation of the SDP as unfounded. farmers and farm workers with the opportunity to enhance their dignity and improve
the quality of their lives through greater productivity of agricultural lands." Of note is
the term "opportunity" which is defined as a favorable chance or opening offered by
Public respondents, on the other hand, aver that the assailed resolution rests on solid circumstances.127 Considering this, by no stretch of imagination can said provision be
grounds set forth in the Terminal Report, a position shared by AMBALA, which, in construed as a guarantee in improving the lives of the FWBs. At best, it merely
some pleadings, is represented by the same counsel as that appearing for the provides for a possibility or favorable chance of uplifting the economic status of the
Supervisory Group. FWBs, which may or may not be attained.

FARM, for its part, posits the view that legal bases obtain for the revocation of the Pertinently, improving the economic status of the FWBs is neither among the legal
SDP, because it does not conform to Sec. 31 of RA 6657 and DAO 10. And training obligations of HLI under the SDP nor an imperative imposition by RA 6657 and DAO
its sight on the resulting dilution of the equity of the FWBs appearing in HLI’s 10, a violation of which would justify discarding the stock distribution option. Nothing
masterlist, FARM would state that the SDP, as couched and implemented, spawned in that option agreement, law or department order indicates otherwise.
disparity when there should be none; parity when there should have been
differentiation.126
39

Significantly, HLI draws particular attention to its having paid its FWBs, during the The provisions of the first paragraph of the adverted Sec. 31 are without relevance to
regime of the SDP (1989-2005), some PhP 3 billion by way of salaries/wages and the issue on the propriety of the assailed order revoking HLI’s SDP, for the paragraph
higher benefits exclusive of free hospital and medical benefits to their immediate deals with the transfer of agricultural lands to the government, as a mode of CARP
family. And attached as Annex "G" to HLI’s Memorandum is the certified true report of compliance, thus:
the finance manager of Jose Cojuangco & Sons Organizations-Tarlac Operations,
captioned as "HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges (in SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily transfer
Thousand Pesos) Since the Stock Option was Approved by PARC/CARP," detailing ownership over their agricultural landholdings to the Republic of the Philippines
what HLI gave their workers from 1989 to 2005. The sum total, as added up by the pursuant to Section 20 hereof or to qualified beneficiaries under such terms and
Court, yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash conditions, consistent with this Act, as they may agree, subject to confirmation by the
Benefits) = PhP 2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = DAR.
PhP 303,040. The cash out figures, as stated in the report, include the cost of
homelots; the PhP 150 million or so representing 3% of the gross produce of the
hacienda; and the PhP 37.5 million representing 3% from the proceeds of the sale of The second and third paragraphs, with their sub-paragraphs, of Sec. 31 provide as
the 500-hectare converted lands. While not included in the report, HLI manifests follows:
having given the FWBs 3% of the PhP 80 million paid for the 80 hectares of land
traversed by the SCTEX.128 On top of these, it is worth remembering that the shares Upon certification by the DAR, corporations owning agricultural lands may give their
of stocks were given by HLI to the FWBs for free. Verily, the FWBs have benefited qualified beneficiaries the right to purchase such proportion of the capital
from the SDP. stock of the corporation that the agricultural land, actually devoted to
agricultural activities, bears in relation to the company’s total assets, under
To address urgings that the FWBs be allowed to disengage from the SDP as HLI has such terms and conditions as may be agreed upon by them. In no case shall the
not anyway earned profits through the years, it cannot be over-emphasized that, as a compensation received by the workers at the time the shares of stocks are distributed
matter of common business sense, no corporation could guarantee a profitable run all be reduced. x x x
the time. As has been suggested, one of the key features of an SDP of a corporate
landowner is the likelihood of the corporate vehicle not earning, or, worse still, losing Corporations or associations which voluntarily divest a proportion of their capital
money.129 stock, equity or participation in favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with the provisions of this Act:
The Court is fully aware that one of the criteria under DAO 10 for the PARC to Provided, That the following conditions are complied with:
consider the advisability of approving a stock distribution plan is the likelihood that the
plan "would result in increased income and greater benefits to [qualified beneficiaries] (a) In order to safeguard the right of beneficiaries who own shares of stocks
than if the lands were divided and distributed to them individually." 130 But as aptly to dividends and other financial benefits, the books of the corporation or
noted during the oral arguments, DAO 10 ought to have not, as it cannot, actually association shall be subject to periodic audit by certified public accountants
exact assurance of success on something that is subject to the will of man, the forces chosen by the beneficiaries;
of nature or the inherent risky nature of business.131 Just like in actual land
distribution, an SDP cannot guarantee, as indeed the SDOA does not guarantee, a (b) Irrespective of the value of their equity in the corporation or association,
comfortable life for the FWBs. The Court can take judicial notice of the fact that there the beneficiaries shall be assured of at least one (1) representative in the
were many instances wherein after a farmworker beneficiary has been awarded with board of directors, or in a management or executive committee, if one exists,
an agricultural land, he just subsequently sells it and is eventually left with nothing in of the corporation or association;
the end.

(c) Any shares acquired by such workers and beneficiaries shall have the
In all then, the onerous condition of the FWBs’ economic status, their life of hardship, same rights and features as all other shares; and
if that really be the case, can hardly be attributed to HLI and its SDP and provide a
valid ground for the plan’s revocation.
(d) Any transfer of shares of stocks by the original beneficiaries shall be void
ab initio unless said transaction is in favor of a qualified and registered
Neither does HLI’s SDP, whence the DAR-attested SDOA/MOA is based, infringe beneficiary within the same corporation.
Sec. 31 of RA 6657, albeit public respondents erroneously submit otherwise.

The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or


allocated to qualified beneficiaries, adverting to what Sec. 31 of RA 6657 refers to as
40

that "proportion of the capital stock of the corporation that the agricultural land, Also, no allegations have been made against HLI restricting the inspection of its
actually devoted to agricultural activities, bears in relation to the company’s total books by accountants chosen by the FWBs; hence, the assumption may be made
assets" had been observed. that there has been no violation of the statutory prescription under sub-paragraph (a)
on the auditing of HLI’s accounts.
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec. 31
of RA 6657. The stipulation reads: Public respondents, however, submit that the distribution of the mandatory minimum
ratio of land-to-shares of stock, referring to the 118,391,976.85 shares with par value
1. The percentage of the value of the agricultural land of Hacienda Luisita of PhP 1 each, should have been made in full within two (2) years from the approval
(P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred and of RA 6657, in line with the last paragraph of Sec. 31 of said law.133
conveyed to the SECOND PARTY is 33.296% that, under the law, is the proportion of
the outstanding capital stock of the SECOND PARTY, which is P355,531,462.00 or Public respondents’ submission is palpably erroneous. We have closely examined the
355,531,462 shares with a par value of P1.00 per share, that has to be distributed to last paragraph alluded to, with particular focus on the two-year period mentioned, and
the THIRD PARTY under the stock distribution plan, the said 33.296% thereof nothing in it remotely supports the public respondents’ posture. In its pertinent part,
being P118,391,976.85 or 118,391,976.85 shares. said Sec. 31 provides:

The appraised value of the agricultural land is PhP 196,630,000 and of HLI’s other SEC. 31. Corporate Landowners x x x
assets is PhP 393,924,220. The total value of HLI’s assets is, therefore, PhP
590,554,220.132 The percentage of the value of the agricultural lands (PhP If within two (2) years from the approval of this Act, the [voluntary] land or stock
196,630,000) in relation to the total assets (PhP 590,554,220) is 33.296%, which transfer envisioned above is not made or realized or the plan for such stock
represents the stockholdings of the 6,296 original qualified farmworker-beneficiaries distribution approved by the PARC within the same period, the agricultural land of the
(FWBs) in HLI. The total number of shares to be distributed to said qualified FWBs is corporate owners or corporation shall be subject to the compulsory coverage of this
118,391,976.85 HLI shares. This was arrived at by getting 33.296% of the Act. (Word in bracket and emphasis added.)
355,531,462 shares which is the outstanding capital stock of HLI with a value of PhP
355,531,462. Thus, if we divide the 118,391,976.85 HLI shares by 6,296 FWBs, then
each FWB is entitled to 18,804.32 HLI shares. These shares under the SDP are to be Properly viewed, the words "two (2) years" clearly refer to the period within which the
given to FWBs for free. corporate landowner, to avoid land transfer as a mode of CARP coverage under RA
6657, is to avail of the stock distribution option or to have the SDP approved. The HLI
secured approval of its SDP in November 1989, well within the two-year period
The Court finds that the determination of the shares to be distributed to the 6,296 reckoned from June 1988 when RA 6657 took effect.
FWBs strictly adheres to the formula prescribed by Sec. 31(b) of RA 6657.
Having hurdled the alleged breach of the agrarian reform policy under Sec. 2 of RA
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs shall 6657 as well as the statutory issues, We shall now delve into what PARC and
be assured of at least one (1) representative in the board of directors or in a respondents deem to be other instances of violation of DAO 10 and the SDP.
management or executive committee irrespective of the value of the equity of the
FWBs in HLI, the Court finds that the SDOA contained provisions making certain the
FWBs’ representation in HLI’s governing board, thus: On the Conversion of Lands

5. Even if only a part or fraction of the shares earmarked for distribution will have Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita
been acquired from the FIRST PARTY and distributed to the THIRD PARTY, FIRST unfragmented is also not among the imperative impositions by the SDP, RA 6657,
PARTY shall execute at the beginning of each fiscal year an irrevocable proxy, valid and DAO 10.
and effective for one (1) year, in favor of the farmworkers appearing as shareholders
of the SECOND PARTY at the start of said year which will empower the THIRD The Terminal Report states that the proposed distribution plan submitted in 1989 to
PARTY or their representative to vote in stockholders’ and board of directors’ the PARC effectively assured the intended stock beneficiaries that the physical
meetings of the SECOND PARTY convened during the year the entire 33.296% of integrity of the farm shall remain inviolate. Accordingly, the Terminal Report and the
the outstanding capital stock of the SECOND PARTY earmarked for distribution and PARC-assailed resolution would take HLI to task for securing approval of the
thus be able to gain such number of seats in the board of directors of the SECOND conversion to non-agricultural uses of 500 hectares of the hacienda. In not too many
PARTY that the whole 33.296% of the shares subject to distribution will be entitled to. words, the Report and the resolution view the conversion as an infringement of Sec.
5(a) of DAO 10 which reads: "a. that the continued operation of the corporation with
41

its agricultural land intact and unfragmented is viable with potential for growth and culled from its Terminal Report, it would appear that the Special Task Force rejected
increased profitability." HLI’s claim of compliance on the basis of this ratiocination:

The PARC is wrong.  The Task Force position: Though, allegedly, the Supervisory Group receives
the 3% gross production share and that others alleged that they received 30
In the first place, Sec. 5(a)––just like the succeeding Sec. 5(b) of DAO 10 on million pesos still others maintain that they have not received anything yet.
increased income and greater benefits to qualified beneficiaries––is but one of the Item No. 4 of the MOA is clear and must be followed. There is a distinction
stated criteria to guide PARC in deciding on whether or not to accept an SDP. Said between the total gross sales from the production of the land and the
Sec. 5(a) does not exact from the corporate landowner-applicant the undertaking to proceeds from the sale of the land. The former refers to the fruits/yield of the
keep the farm intact and unfragmented ad infinitum. And there is logic to HLI’s stated agricultural land while the latter is the land itself. The phrase "the
observation that the key phrase in the provision of Sec. 5(a) is "viability of corporate beneficiaries are entitled every year to an amount approximately equivalent
operations": "[w]hat is thus required is not the agricultural land remaining intact x x x to 3% would only be feasible if the subject is the produce since there is at
but the viability of the corporate operations with its agricultural land being intact and least one harvest per year, while such is not the case in the sale of the
unfragmented. Corporate operation may be viable even if the corporate agricultural agricultural land. This negates then the claim of HLI that, all that the FWBs
land does not remain intact or [un]fragmented."134 can be entitled to, if any, is only 3% of the purchase price of the converted
land.
It is, of course, anti-climactic to mention that DAR viewed the conversion as not  Besides, the Conversion Order dated 14 August 1996 provides that "the
violative of any issuance, let alone undermining the viability of Hacienda Luisita’s benefits, wages and the like, presently received by the FWBs shall not in any
operation, as the DAR Secretary approved the land conversion applied for and its way be reduced or adversely affected. Three percent of the gross selling
disposition via his Conversion Order dated August 14, 1996 pursuant to Sec. 65 of price of the sale of the converted land shall be awarded to the beneficiaries
RA 6657 which reads: of the SDO." The 3% gross production share then is different from the 3%
proceeds of the sale of the converted land and, with more reason, the 33%
share being claimed by the FWBs as part owners of the Hacienda, should
Sec. 65. Conversion of Lands.¾After the lapse of five years from its award when the have been given the FWBs, as stockholders, and to which they could have
land ceases to be economically feasible and sound for agricultural purposes, or the been entitled if only the land were acquired and redistributed to them under
locality has become urbanized and the land will have a greater economic value for the CARP.
residential, commercial or industrial purposes, the DAR upon application of the
beneficiary or landowner with due notice to the affected parties, and subject to
existing laws, may authorize the x x x conversion of the land and its dispositions. x x x xxxx

On the 3% Production Share  The FWBs do not receive any other benefits under the MOA except the
aforementioned [(viz: shares of stocks (partial), 3% gross production sale
(not all) and homelots (not all)].
On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross
production sales of the hacienda and pay dividends from profit, the entries in its
financial books tend to indicate compliance by HLI of the profit-sharing equivalent to Judging from the above statements, the Special Task Force is at best silent on
3% of the gross sales from the production of the agricultural land on top of (a) the whether HLI has failed to comply with the 3% production-sharing obligation or the 3%
salaries and wages due FWBs as employees of the company and (b) the 3% of the of the gross selling price of the converted land and the SCTEX lot. In fact, it admits
gross selling price of the converted land and that portion used for the SCTEX. A that the FWBs, though not all, have received their share of the gross production sales
plausible evidence of compliance or non-compliance, as the case may be, could be and in the sale of the lot to SCTEX. At most, then, HLI had complied substantially with
the books of account of HLI. Evidently, the cry of some groups of not having received this SDP undertaking and the conversion order. To be sure, this slight breach would
their share from the gross production sales has not adequately been validated on the not justify the setting to naught by PARC of the approval action of the earlier PARC.
ground by the Special Task Force. Even in contract law, rescission, predicated on violation of reciprocity, will not be
permitted for a slight or casual breach of contract; rescission may be had only for
such breaches that are substantial and fundamental as to defeat the object of the
Indeed, factual findings of administrative agencies are conclusive when supported by parties in making the agreement.137
substantial evidence and are accorded due respect and weight, especially when they
are affirmed by the CA.135 However, such rule is not absolute. One such exception is
when the findings of an administrative agency are conclusions without citation of Despite the foregoing findings, the revocation of the approval of the SDP is not
specific evidence on which they are based,136 such as in this particular instance. As without basis as shown below.
42

On Titles to Homelots Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the
qualified family beneficiaries were not given the 240 square meters each. So, can you
Under RA 6657, the distribution of homelots is required only for corporations or also [prove] that the qualified family beneficiaries were already provided the 240
business associations owning or operating farms which opted for land distribution. square meter homelots.
Sec. 30 of RA 6657 states:
Atty. Asuncion: We will, your Honor please.138
SEC. 30. Homelots and Farmlots for Members of Cooperatives.¾The individual
members of the cooperatives or corporations mentioned in the preceding section shall Other than the financial report, however, no other substantial proof showing that all
be provided with homelots and small farmlots for their family use, to be taken from the the qualified beneficiaries have received homelots was submitted by HLI. Hence, this
land owned by the cooperative or corporation. Court is constrained to rule that HLI has not yet fully complied with its undertaking to
distribute homelots to the FWBs under the SDP.
The "preceding section" referred to in the above-quoted provision is as follows:
On "Man Days" and the Mechanics of Stock Distribution
SEC. 29. Farms Owned or Operated by Corporations or Other Business
Associations.¾In the case of farms owned or operated by corporations or other In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of
business associations, the following rules shall be observed by the PARC. stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the
SDOA states:
In general, lands shall be distributed directly to the individual worker-beneficiaries.
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI]
In case it is not economically feasible and sound to divide the land, then it shall be shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the
owned collectively by the worker-beneficiaries who shall form a workers’ cooperative THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them
or association which will deal with the corporation or business association. Until a of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND
new agreement is entered into by and between the workers’ cooperative or PARTY that are presently owned and held by the FIRST PARTY, until such time as
association and the corporation or business association, any agreement existing at the entire block of 118,391,976.85 shares shall have been completely acquired and
the time this Act takes effect between the former and the previous landowner shall be distributed to the THIRD PARTY.
respected by both the workers’ cooperative or association and the corporation or
business association. Based on the above-quoted provision, the distribution of the shares of stock to the
FWBs, albeit not entailing a cash out from them, is contingent on the number of "man
Noticeably, the foregoing provisions do not make reference to corporations which days," that is, the number of days that the FWBs have worked during the year. This
opted for stock distribution under Sec. 31 of RA 6657. Concomitantly, said formula deviates from Sec. 1 of DAO 10, which decrees the distribution of equal
corporations are not obliged to provide for it except by stipulation, as in this case. number of shares to the FWBs as the minimum ratio of shares of stock for purposes
of compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
Under the SDP, HLI undertook to "subdivide and allocate for free and without charge
among the qualified family-beneficiaries x x x residential or homelots of not more than Section 4. Stock Distribution Plan.¾The [SDP] submitted by the corporate landowner-
240 sq. m. each, with each family beneficiary being assured of receiving and owning applicant shall provide for the distribution of an equal number of shares of the same
a homelot in the barrio or barangay where it actually resides," "within a reasonable class and value, with the same rights and features as all other shares, to each of the
time." qualified beneficiaries. This distribution plan in all cases, shall be at least the
minimum ratio for purposes of compliance with Section 31 of R.A. No. 6657.
More than sixteen (16) years have elapsed from the time the SDP was approved by
PARC, and yet, it is still the contention of the FWBs that not all was given the 240- On top of the minimum ratio provided under Section 3 of this Implementing Guideline,
square meter homelots and, of those who were already given, some still do not have the corporate landowner-applicant may adopt additional stock distribution schemes
the corresponding titles. taking into account factors such as rank, seniority, salary, position and other
circumstances which may be deemed desirable as a matter of sound company policy.
(Emphasis supplied.)
During the oral arguments, HLI was afforded the chance to refute the foregoing
allegation by submitting proof that the FWBs were already given the said homelots:
43

The above proviso gives two (2) sets or categories of shares of stock which a Justice Abad: Right now, also the government, in a way, gave up its right to own the
qualified beneficiary can acquire from the corporation under the SDP. The first land because that way the government takes own [sic] the land and distribute it to the
pertains, as earlier explained, to the mandatory minimum ratio of shares of stock to farmers and pay for the land, is that correct?
be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This minimum
ratio contemplates of that "proportion of the capital stock of the corporation that the Atty. Dela Merced: Yes, Your Honor.
agricultural land, actually devoted to agricultural activities, bears in relation to the
company’s total assets."139 It is this set of shares of stock which, in line with Sec. 4 of
DAO 10, is supposed to be allocated "for the distribution of an equal number of Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to
shares of stock of the same class and value, with the same rights and features as all the farmers at that time that numbered x x x those who signed five thousand four
other shares, to each of the qualified beneficiaries." hundred ninety eight (5,498) beneficiaries, is that correct?

On the other hand, the second set or category of shares partakes of a gratuitous Atty. Dela Merced: Yes, Your Honor.
extra grant, meaning that this set or category constitutes an augmentation share/s
that the corporate landowner may give under an additional stock distribution scheme, Justice Abad: But later on, after assigning them their shares, some workers came in
taking into account such variables as rank, seniority, salary, position and like factors from 1989, 1990, 1991, 1992 and the rest of the years that you gave additional
which the management, in the exercise of its sound discretion, may deem shares who were not in the original list of owners?
desirable.140
Atty. Dela Merced: Yes, Your Honor.
Before anything else, it should be stressed that, at the time PARC approved HLI’s
SDP, HLI recognized 6,296individuals as qualified FWBs. And under the 30-year
Justice Abad: Did those new workers give up any right that would have belong to
stock distribution program envisaged under the plan, FWBs who came in after 1989, them in 1989 when the land was supposed to have been placed under CARP?
new FWBs in fine, may be accommodated, as they appear to have in fact been
accommodated as evidenced by their receipt of HLI shares.
Atty. Dela Merced: If you are talking or referring… (interrupted)
Now then, by providing that the number of shares of the original 1989 FWBs shall
depend on the number of "man days," HLI violated the afore-quoted rule on stock Justice Abad: None! You tell me. None. They gave up no rights to land?
distribution and effectively deprived the FWBs of equal shares of stock in the
corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically had given Atty. Dela Merced: They did not do the same thing as we did in 1989, Your Honor.
up their rights to the land that could have been distributed to them, suffered a dilution
of their due share entitlement. As has been observed during the oral arguments, HLI
Justice Abad: No, if they were not workers in 1989 what land did they give up? None,
has chosen to use the shares earmarked for farmworkers as reward system chips to
if they become workers later on.
water down the shares of the original 6,296 FWBs.141 Particularly:

Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the original…
Justice Abad: If the SDOA did not take place, the other thing that would have
(interrupted)
happened is that there would be CARP?

Justice Abad: So why is it that the rights of those who gave up their lands would be
Atty. Dela Merced: Yes, Your Honor.
diluted, because the company has chosen to use the shares as reward system for
new workers who come in? It is not that the new workers, in effect, become just
Justice Abad: That’s the only point I want to know x x x. Now, but they chose to enter workers of the corporation whose stockholders were already fixed. The TADECO who
SDOA instead of placing the land under CARP. And for that reason those who would has shares there about sixty six percent (66%) and the five thousand four hundred
have gotten their shares of the land actually gave up their rights to this land in place ninety eight (5,498) farmers at the time of the SDOA? Explain to me. Why, why will
of the shares of the stock, is that correct? you x x x what right or where did you get that right to use this shares, to water down
the shares of those who should have been benefited, and to use it as a reward
Atty. Dela Merced: It would be that way, Your Honor. system decided by the company?142
44

From the above discourse, it is clear as day that the original 6,296 FWBs, who were veritably evade compliance with agrarian reform by simply deferring to absurd limits
qualified beneficiaries at the time of the approval of the SDP, suffered from watering the implementation of the stock distribution scheme.
down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI
shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per The argument is urged that the thirty (30)-year distribution program is justified by the
beneficiary, because the acquisition and distribution of the HLI shares were based on fact that, under Sec. 26 of RA 6657, payment by beneficiaries of land distribution
"man days" or "number of days worked" by the FWB in a year’s time. As explained by under CARP shall be made in thirty (30) annual amortizations. To HLI, said section
HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she provides a justifying dimension to its 30-year stock distribution program.
becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does
not get any share at year end. The number of HLI shares distributed varies depending
on the number of days the FWBs were allowed to work in one year. Worse, HLI hired HLI’s reliance on Sec. 26 of RA 6657, quoted in part below, is obviously misplaced as
farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the the said provision clearly deals with land distribution.
Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of
farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which SEC. 26. Payment by Beneficiaries.¾Lands awarded pursuant to this Act shall be
include the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x x x.
shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly,
the minimum individual allocation of each original FWB of 18,804.32 shares was Then, too, the ones obliged to pay the LBP under the said provision are the
diluted as a result of the use of "man days" and the hiring of additional farmworkers. beneficiaries. On the other hand, in the instant case, aside from the fact that what is
involved is stock distribution, it is the corporate landowner who has the obligation to
Going into another but related matter, par. 3 of the SDOA expressly providing for a distribute the shares of stock among the FWBs.
30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what
Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the Evidently, the land transfer beneficiaries are given thirty (30) years within which to
approved stock distribution plan within three (3) months from receipt by the corporate pay the cost of the land thus awarded them to make it less cumbersome for them to
landowner of the approval of the plan by PARC. In fact, based on the said provision, pay the government. To be sure, the reason underpinning the 30-year
the transfer of the shares of stock in the names of the qualified FWBs should be accommodation does not apply to corporate landowners in distributing shares of
recorded in the stock and transfer books and must be submitted to the SEC within stock to the qualified beneficiaries, as the shares may be issued in a much shorter
sixty (60) days from implementation. As stated: period of time.

Section 11. Implementation/Monitoring of Plan.¾The approved stock distribution plan Taking into account the above discussion, the revocation of the SDP by PARC should
shall be implemented within three (3) months from receipt by the corporate be upheld for violating DAO 10. It bears stressing that under Sec. 49 of RA 6657, the
landowner-applicant of the approval thereof by the PARC, and the transfer of the PARC and the DAR have the power to issue rules and regulations, substantive or
shares of stocks in the names of the qualified beneficiaries shall be recorded in stock procedural. Being a product of such rule-making power, DAO 10 has the force and
and transfer books and submitted to the Securities and Exchange Commission effect of law and must be duly complied with.143 The PARC is, therefore, correct in
(SEC) within sixty (60) days from the said implementation of the stock distribution revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November
plan. (Emphasis supplied.) 21, l989 approving the HLI’s SDP is nullified and voided.

It is evident from the foregoing provision that the implementation, that is, the III.
distribution of the shares of stock to the FWBs, must be made within three (3) months
from receipt by HLI of the approval of the stock distribution plan by PARC. While
neither of the clashing parties has made a compelling case of the thrust of this We now resolve the petitions-in-intervention which, at bottom, uniformly pray for the
provision, the Court is of the view and so holds that the intent is to compel the exclusion from the coverage of the assailed PARC resolution those portions of the
corporate landowner to complete, not merely initiate, the transfer process of shares converted land within Hacienda Luisita which RCBC and LIPCO acquired by
within that three-month timeframe. Reinforcing this conclusion is the 60-day stock purchase.
transfer recording (with the SEC) requirement reckoned from the implementation of
the SDP. Both contend that they are innocent purchasers for value of portions of the converted
farm land. Thus, their plea for the exclusion of that portion from PARC Resolution
To the Court, there is a purpose, which is at once discernible as it is practical, for the 2005-32-01, as implemented by a DAR-issued Notice of Coverage dated January 2,
three-month threshold. Remove this timeline and the corporate landowner can 2006, which called for mandatory CARP acquisition coverage of lands subject of the
SDP.
45

To restate the antecedents, after the conversion of the 500 hectares of land in It can rightfully be said that both LIPCO and RCBC are––based on the above
Hacienda Luisita, HLI transferred the 300 hectares to Centennary, while ceding the requirements and with respect to the adverted transactions of the converted land in
remaining 200-hectare portion to LRC. Subsequently, LIPCO purchased the entire question––purchasers in good faith for value entitled to the benefits arising from such
three hundred (300) hectares of land from Centennary for the purpose of developing status.
the land into an industrial complex.144 Accordingly, the TCT in Centennary’s name
was canceled and a new one issued in LIPCO’s name. Thereafter, said land was First, at the time LIPCO purchased the entire three hundred (300) hectares of
subdivided into two (2) more parcels of land. Later on, LIPCO transferred about 184 industrial land, there was no notice of any supposed defect in the title of its transferor,
hectares to RCBC by way of dacion en pago, by virtue of which TCTs in the name of Centennary, or that any other person has a right to or interest in such property. In
RCBC were subsequently issued. fact, at the time LIPCO acquired said parcels of land, only the following annotations
appeared on the TCT in the name of Centennary: the Secretary’s Certificate in favor
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered of Teresita Lopa, the Secretary’s Certificate in favor of Shintaro Murai, and the
owner receiving a certificate of title in pursuance of a decree of registration and every conversion of the property from agricultural to industrial and residential use.149
subsequent purchaser of registered land taking a certificate of title for value and in
good faith shall hold the same free from all encumbrances except those noted on the The same is true with respect to RCBC. At the time it acquired portions of Hacienda
certificate and enumerated therein."145 Luisita, only the following general annotations appeared on the TCTs of LIPCO: the
Deed of Restrictions, limiting its use solely as an industrial estate; the Secretary’s
It is settled doctrine that one who deals with property registered under the Torrens Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in
system need not go beyond the four corners of, but can rely on what appears on, the favor of RCBC to guarantee the payment of PhP 300 million.
title. He is charged with notice only of such burdens and claims as are annotated on
the title. This principle admits of certain exceptions, such as when the party has It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that
actual knowledge of facts and circumstances that would impel a reasonably cautious were previously covered by the SDP. Good faith "consists in the possessor’s belief
man to make such inquiry, or when the purchaser has knowledge of a defect or the that the person from whom he received it was the owner of the same and could
lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to convey his title. Good faith requires a well-founded belief that the person from whom
inquire into the status of the title of the property in litigation. 146 A higher level of care title was received was himself the owner of the land, with the right to convey it. There
and diligence is of course expected from banks, their business being impressed with is good faith where there is an honest intention to abstain from taking any
public interest.147 unconscientious advantage from another."150 It is the opposite of fraud.

Millena v. Court of Appeals describes a purchaser in good faith in this wise: To be sure, intervenor RCBC and LIPCO knew that the lots they bought were
subjected to CARP coverage by means of a stock distribution plan, as the DAR
x x x A purchaser in good faith is one who buys property of another, without notice conversion order was annotated at the back of the titles of the lots they acquired.
that some other person has a right to, or interest in, such property at the time of such However, they are of the honest belief that the subject lots were validly converted to
purchase, or before he has notice of the claim or interest of some other persons in the commercial or industrial purposes and for which said lots were taken out of the CARP
property. Good faith, or the lack of it, is in the final analysis a question of intention; but coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and
in ascertaining the intention by which one is actuated on a given occasion, we are validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion
necessarily controlled by the evidence as to the conduct and outward acts by which and disposition of agricultural lands previously covered by CARP land acquisition
alone the inward motive may, with safety, be determined. Truly, good faith is not a "after the lapse of five (5) years from its award when the land ceases to be
visible, tangible fact that can be seen or touched, but rather a state or condition of economically feasible and sound for agricultural purposes or the locality has become
mind which can only be judged by actual or fancied tokens or signs. Otherwise stated, urbanized and the land will have a greater economic value for residential, commercial
good faith x x x refers to the state of mind which is manifested by the acts of the or industrial purposes." Moreover, DAR notified all the affected parties, more
individual concerned.148 (Emphasis supplied.) particularly the FWBs, and gave them the opportunity to comment or oppose the
proposed conversion. DAR, after going through the necessary processes, granted the
In fine, there are two (2) requirements before one may be considered a purchaser in conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction
good faith, namely: (1) that the purchaser buys the property of another without notice under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and
that some other person has a right to or interest in such property; and (2) that the its original exclusive jurisdiction over all matters involving the implementation of
purchaser pays a full and fair price for the property at the time of such purchase or agrarian reform. The DAR conversion order became final and executory after none of
before he or she has notice of the claim of another. the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO
purchased the lots in question on their honest and well-founded belief that the
previous registered owners could legally sell and convey the lots though these were
46

previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in (b) BOI Certificate of Registration No. 96-020 dated 20 December 1996
acquiring the subject lots. issued in accordance with the Omnibus Investments Code of 1987;

And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for (c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997,
value. Undeniably, LIPCO acquired 300 hectares of land from Centennary for the approving LIPCO’s application for a mixed ecozone and proclaiming the
amount of PhP 750 million pursuant to a Deed of Sale dated July 30, 1998. 151 On the three hundred (300) hectares of the industrial land as a Special Economic
other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO Zone;
conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to
pay for a loan of PhP 431,695,732.10. (d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of
Tarlac, approving the Final Development Permit for the Luisita Industrial
As bona fide purchasers for value, both LIPCO and RCBC have acquired rights which Park II Project;
cannot just be disregarded by DAR, PARC or even by this Court. As held in Spouses
Chua v. Soriano: (e) Development Permit dated 13 August 1997 for the proposed Luisita
Industrial Park II Project issued by the Office of the Sangguniang Bayan of
With the property in question having already passed to the hands of purchasers in Tarlac;155
good faith, it is now of no moment that some irregularity attended the issuance of the
SPA, consistent with our pronouncement in Heirs of Spouses Benito Gavino and (f) DENR Environmental Compliance Certificate dated 01 October 1997
Juana Euste v. Court of Appeals, to wit: issued for the proposed project of building an industrial complex on three
hundred (300) hectares of industrial land;156
x x x the general rule that the direct result of a previous void contract cannot be valid,
is inapplicable in this case as it will directly contravene the Torrens system of (g) Certificate of Registration No. 00794 dated 26 December 1997 issued by
registration. Where innocent third persons, relying on the correctness of the the HLURB on the project of Luisita Industrial Park II with an area of three
certificate of title thus issued, acquire rights over the property, the court cannot million (3,000,000) square meters;157
disregard such rights and order the cancellation of the certificate. The effect of
such outright cancellation will be to impair public confidence in the certificate of title.
The sanctity of the Torrens system must be preserved; otherwise, everyone dealing (h) License to Sell No. 0076 dated 26 December 1997 issued by the HLURB
with the property registered under the system will have to inquire in every instance as authorizing the sale of lots in the Luisita Industrial Park II;
to whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law. (i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring Certain
Parcels of Private Land in Barangay San Miguel, Municipality of Tarlac,
Being purchasers in good faith, the Chuas already acquired valid title to the Province of Tarlac, as a Special Economic Zone pursuant to Republic Act
property. A purchaser in good faith holds an indefeasible title to the property No. 7916," designating the Luisita Industrial Park II consisting of three
and he is entitled to the protection of the law.152 x x x (Emphasis supplied.) hundred hectares (300 has.) of industrial land as a Special Economic Zone;
and
To be sure, the practicalities of the situation have to a point influenced Our disposition
on the fate of RCBC and LIPCO. After all, the Court, to borrow from Association of (j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued by the
Small Landowners in the Philippines, Inc.,153 is not a "cloistered institution removed" PEZA, stating that pursuant to Presidential Proclamation No. 1207 dated 22
from the realities on the ground. To note, the approval and issuances of both the April 1998 and Republic Act No. 7916, LIPCO has been registered as an
national and local governments showing that certain portions of Hacienda Luisita Ecozone Developer/Operator of Luisita Industrial Park II located in San
have effectively ceased, legally and physically, to be agricultural and, therefore, no Miguel, Tarlac, Tarlac.
longer CARPable are a matter of fact which cannot just be ignored by the Court and
the DAR. Among the approving/endorsing issuances:154 While a mere reclassification of a covered agricultural land or its inclusion in an
economic zone does not automatically allow the corporate or individual landowner to
(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang Bayan change its use,158 the reclassification process is a prima facie indicium that the land
of Tarlac favorably endorsing the 300-hectare industrial estate project of has ceased to be economically feasible and sound for agricultural uses. And if only to
LIPCO; stress, DAR Conversion Order No. 030601074-764-(95) issued in 1996 by then DAR
47

Secretary Garilao had effectively converted 500 hectares of hacienda land from In the language of an American Supreme Court decision: "The actual existence of a
agricultural to industrial/commercial use and authorized their disposition. statute, prior to such a determination of [unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
In relying upon the above-mentioned approvals, proclamation and conversion order, erased by a new judicial declaration. The effect of the subsequent ruling as to
both RCBC and LIPCO cannot be considered at fault for believing that certain invalidity may have to be considered in various aspects,––with respect to particular
portions of Hacienda Luisita are industrial/commercial lands and are, thus, outside the relations, individual and corporate, and particular conduct, private and official." x x x
ambit of CARP. The PARC, and consequently DAR, gravely abused its discretion
when it placed LIPCO’s and RCBC’s property which once formed part of Hacienda Given the above perspective and considering that more than two decades had
Luisita under the CARP compulsory acquisition scheme via the assailed Notice of passed since the PARC’s approval of the HLI’s SDP, in conjunction with numerous
Coverage. activities performed in good faith by HLI, and the reliance by the FWBs on the legality
and validity of the PARC-approved SDP, perforce, certain rights of the parties, more
As regards the 80.51-hectare land transferred to the government for use as part of particularly the FWBs, have to be respected pursuant to the application in a general
the SCTEX, this should also be excluded from the compulsory agrarian reform way of the operative fact doctrine.
coverage considering that the transfer was consistent with the government’s exercise
of the power of eminent domain159 and none of the parties actually questioned the A view, however, has been advanced that the operative fact doctrine is of minimal or
transfer. altogether without relevance to the instant case as it applies only in considering the
effects of a declaration of unconstitutionality of a statute, and not of a declaration of
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC nullity of a contract. This is incorrect, for this view failed to consider is that it is NOT
Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to the SDOA dated May 11, 1989 which was revoked in the instant case. Rather, it is
certain "operative facts" that had occurred in the interim. Pertinently, the "operative PARC’s approval of the HLI’s Proposal for Stock Distribution under CARP which
fact" doctrine realizes that, in declaring a law or executive action null and void, or, embodied the SDP that was nullified.
by extension, no longer without force and effect, undue harshness and resulting
unfairness must be avoided. This is as it should realistically be, since rights might A recall of the antecedent events would show that on May 11, 1989, Tadeco, HLI, and
have accrued in favor of natural or juridical persons and obligations justly incurred in the qualified FWBs executed the SDOA. This agreement provided the basis and
the meantime.160 The actual existence of a statute or executive act is, prior to such a mechanics of the SDP that was subsequently proposed and submitted to DAR for
determination, an operative fact and may have consequences which cannot justly be approval. It was only after its review that the PARC, through then Sec. Defensor-
ignored; the past cannot always be erased by a new judicial declaration. 161 Santiago, issued the assailed Resolution No. 89-12-2 approving the SDP.
Considerably, it is not the SDOA which gave legal force and effect to the stock
The oft-cited De Agbayani v. Philippine National Bank162 discussed the effect to be distribution scheme but instead, it is the approval of the SDP under the PARC
given to a legislative or executive act subsequently declared invalid: Resolution No. 89-12-2 that gave it its validity.

x x x It does not admit of doubt that prior to the declaration of nullity such challenged The above conclusion is bolstered by the fact that in Sec. Pangandaman’s
legislative or executive act must have been in force and had to be complied with. This recommendation to the PARC Excom, what he proposed is the recall/revocation of
is so as until after the judiciary, in an appropriate case, declares its invalidity, it is PARC Resolution No. 89-12-2 approving HLI’s SDP, and not the revocation of the
entitled to obedience and respect. Parties may have acted under it and may have SDOA. Sec. Pangandaman’s recommendation was favorably endorsed by the PARC
changed their positions. What could be more fitting than that in a subsequent litigation Validation Committee to the PARC Excom, and these recommendations were
regard be had to what has been done while such legislative or executive act was in referred to in the assailed Resolution No. 2005-32-01. Clearly, it is not the SDOA
operation and presumed to be valid in all respects. It is now accepted as a doctrine which was made the basis for the implementation of the stock distribution scheme.
that prior to its being nullified, its existence as a fact must be reckoned with. This is
merely to reflect awareness that precisely because the judiciary is the government That the operative fact doctrine squarely applies to executive acts––in this case, the
organ which has the final say on whether or not a legislative or executive measure is approval by PARC of the HLI proposal for stock distribution––is well-settled in our
valid, a period of time may have elapsed before it can exercise the power of judicial jurisprudence. In Chavez v. National Housing Authority,163 We held:
review that may lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what had transpired Petitioner postulates that the "operative fact" doctrine is inapplicable to the present
prior to such adjudication. case because it is an equitable doctrine which could not be used to countenance an
inequitable result that is contrary to its proper office.
48

On the other hand, the petitioner Solicitor General argues that the existence of the decree. . . . It is quite clear, however, that such broad statements as to the effect of a
various agreements implementing the SMDRP is an operative fact that can no longer determination of unconstitutionality must be taken with qualifications. The actual
be disturbed or simply ignored, citing Rieta v. People of the Philippines. existence of a statute, prior to [the determination of its invalidity], is an operative fact
and may have consequences which cannot justly be ignored. The past cannot always
The argument of the Solicitor General is meritorious. be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects — with respect to particular
conduct, private and official. Questions of rights claimed to have become vested, of
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, status, of prior determinations deemed to have finality and acted upon accordingly, of
wherein it is stated that a legislative or executive act, prior to its being declared as public policy in the light of the nature both of the statute and of its previous
unconstitutional by the courts, is valid and must be complied with, thus: application, demand examination. These questions are among the most difficult of
those which have engaged the attention of courts, state and federal, and it is manifest
xxx xxx xxx from numerous decisions that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.’
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service
Commission, wherein we ruled that: xxx xxx xxx

Moreover, we certainly cannot nullify the City Government's order of suspension, as "Similarly, the implementation/enforcement of presidential decrees prior to their
we have no reason to do so, much less retroactively apply such nullification to deprive publication in the Official Gazette is ‘an operative fact which may have consequences
private respondent of a compelling and valid reason for not filing the leave which cannot be justly ignored. The past cannot always be erased by a new judicial
application. For as we have held, a void act though in law a mere scrap of paper declaration . . . that an all-inclusive statement of a principle of absolute retroactive
nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. invalidity cannot be justified.’"
Consequently, the existence of a statute or executive order prior to its being adjudged
void is an operative fact to which legal consequences are attached. It would indeed The Chicot doctrine cited in Tañada advocates that, prior to the nullification of a
be ghastly unfair to prevent private respondent from relying upon the order of statute, there is an imperative necessity of taking into account its actual existence as
suspension in lieu of a formal leave application. (Citations omitted; Emphasis an operative fact negating the acceptance of "a principle of absolute retroactive
supplied.) invalidity." Whatever was done while the legislative or the executive act was in
operation should be duly recognized and presumed to be valid in all respects. The
The applicability of the operative fact doctrine to executive acts was further explicated ASSO that was issued in 1979 under General Order No. 60 — long before our
by this Court in Rieta v. People,164 thus: Decision in Tañada and the arrest of petitioner — is an operative fact that can no
longer be disturbed or simply ignored. (Citations omitted; Emphasis supplied.)
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order
(ASSO) No. 4754 was invalid, as the law upon which it was predicated — General To reiterate, although the assailed Resolution No. 2005-32-01 states that it revokes or
Order No. 60, issued by then President Ferdinand E. Marcos — was subsequently recalls the SDP, what it actually revoked or recalled was the PARC’s approval of the
declared by the Court, in Tañada v. Tuvera, 33 to have no force and effect. Thus, he SDP embodied in Resolution No. 89-12-2. Consequently, what was actually declared
asserts, any evidence obtained pursuant thereto is inadmissible in evidence. null and void was an executive act, PARC Resolution No. 89-12-2,165and not a
contract (SDOA). It is, therefore, wrong to say that it was the SDOA which was
We do not agree. In Tañada, the Court addressed the possible effects of its annulled in the instant case. Evidently, the operative fact doctrine is applicable.
declaration of the invalidity of various presidential issuances. Discussing therein how
such a declaration might affect acts done on a presumption of their validity, the Court IV.
said:
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP
". . .. In similar situations in the past this Court had taken the pragmatic and realistic are upheld, the revocation must, by application of the operative fact principle, give
course set forth in Chicot County Drainage District vs. Baxter Bank to wit: way to the right of the original 6,296 qualified FWBs to choose whether they want to
remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact that
‘The courts below have proceeded on the theory that the Act of Congress, having in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the
been found to be unconstitutional, was not a law; that it was inoperative, conferring no basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated November
rights and imposing no duties, and hence affording no basis for the challenged 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries
49

and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of shall be liable for PhP 80,511,500 as consideration for the sale of the 80.51-hectare
the gross produce from agricultural lands, and 3% of the proceeds of the sale of the SCTEX lot.
500-hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares
totaling 118,391,976.85 were distributed as of April 22, 2005. 166 On August 6, 20l0, We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of the
HLI and private respondents submitted a Compromise Agreement, in which HLI gave 500-hectare land and 80.51-hectare SCTEX lot to the FWBs. We also take into
the FWBs the option of acquiring a piece of agricultural land or remain as HLI account the payment of taxes and expenses relating to the transfer of the land and
stockholders, and as a matter of fact, most FWBs indicated their choice of remaining HLI’s statement that most, if not all, of the proceeds were used for legitimate
as stockholders. These facts and circumstances tend to indicate that some, if not all, corporate purposes. In order to determine once and for all whether or not all the
of the FWBs may actually desire to continue as HLI shareholders. A matter best left to proceeds were properly utilized by HLI and its subsidiary, Centennary, DAR will
their own discretion. engage the services of a reputable accounting firm to be approved by the parties to
audit the books of HLI to determine if the proceeds of the sale of the 500-hectare land
With respect to the other FWBs who were not listed as qualified beneficiaries as of and the 80.51-hectare SCTEX lot were actually used for legitimate corporate
November 21, 1989 when the SDP was approved, they are not accorded the right to purposes, titling expenses and in compliance with the August 14, 1996 Conversion
acquire land but shall, however, continue as HLI stockholders. All the benefits and Order. The cost of the audit will be shouldered by HLI. If after such audit, it is
homelots167 received by the 10,502 FWBs (6,296 original FWBs and 4,206 non- determined that there remains a balance from the proceeds of the sale, then the
qualified FWBs) listed as HLI stockholders as of August 2, 2010 shall be respected balance shall be distributed to the qualified FWBs.
with no obligation to refund or return them since the benefits (except the homelots)
were received by the FWBs as farmhands in the agricultural enterprise of HLI and A view has been advanced that HLI must pay the FWBs yearly rent for use of the land
other fringe benefits were granted to them pursuant to the existing collective from 1989. We disagree. It should not be forgotten that the FWBs are also
bargaining agreement with Tadeco. If the number of HLI shares in the names of the stockholders of HLI, and the benefits acquired by the corporation from its possession
original FWBs who opt to remain as HLI stockholders falls below the guaranteed and use of the land ultimately redounded to the FWBs’ benefit based on its business
allocation of 18,804.32 HLI shares per FWB, the HLI shall assign additional shares to operations in the form of salaries, and other fringe benefits under the CBA. To still
said FWBs to complete said minimum number of shares at no cost to said FWBs. require HLI to pay rent to the FWBs will result in double compensation.

With regard to the homelots already awarded or earmarked, the FWBs are not For sure, HLI will still exist as a corporation even after the revocation of the SDP
obliged to return the same to HLI or pay for its value since this is a benefit granted although it will no longer be operating under the SDP, but pursuant to the Corporation
under the SDP. The homelots do not form part of the 4,915.75 hectares covered by Code as a private stock corporation. The non-agricultural assets amounting to PhP
the SDP but were taken from the 120.9234 hectare residential lot owned by Tadeco. 393,924,220 shall remain with HLI, while the agricultural lands valued at PhP
Those who did not receive the homelots as of the revocation of the SDP on 196,630,000 with an original area of 4,915.75 hectares shall be turned over to DAR
December 22, 2005 when PARC Resolution No. 2005-32-01 was issued, will no for distribution to the FWBs. To be deducted from said area are the 500-hectare lot
longer be entitled to homelots. Thus, in the determination of the ultimate agricultural subject of the August 14, 1996 Conversion Order, the 80.51-hectare SCTEX lot, and
land that will be subjected to land distribution, the aggregate area of the homelots will the total area of 6,886.5 square meters of individual lots that should have been
no longer be deducted. distributed to FWBs by DAR had they not opted to stay in HLI.

There is a claim that, since the sale and transfer of the 500 hectares of land subject of HLI shall be paid just compensation for the remaining agricultural land that will be
the August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot came after transferred to DAR for land distribution to the FWBs. We find that the date of the
compulsory coverage has taken place, the FWBs should have their corresponding "taking" is November 21, 1989, when PARC approved HLI’s SDP per PARC
share of the land’s value. There is merit in the claim. Since the SDP approved by Resolution No. 89-12-2. DAR shall coordinate with LBP for the determination of just
PARC Resolution No. 89-12-2 has been nullified, then all the lands subject of the compensation. We cannot use May 11, 1989 when the SDOA was executed, since it
SDP will automatically be subject of compulsory coverage under Sec. 31 of RA 6657. was the SDP, not the SDOA, that was approved by PARC.
Since the Court excluded the 500-hectare lot subject of the August 14, 1996
Conversion Order and the 80.51-hectare SCTEX lot acquired by the government from
the area covered by SDP, then HLI and its subsidiary, Centennary, shall be liable to The instant petition is treated pro hac vice in view of the peculiar facts and
the FWBs for the price received for said lots. HLI shall be liable for the value received circumstances of the case.
for the sale of the 200-hectare land to LRC in the amount of PhP 500,000,000 and the
equivalent value of the 12,000,000 shares of its subsidiary, Centennary, for the 300- WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01
hectare lot sold to LIPCO for the consideration of PhP 750,000,000. Likewise, HLI dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006,
placing the lands subject of HLI’s SDP under compulsory coverage on mandated land
50

acquisition scheme of the CARP, are hereby AFFIRMED with the MODIFICATION engage the services of a reputable accounting firm approved by the parties to audit
that the original 6,296 qualified FWBs shall have the option to remain as stockholders the books of HLI and Centennary Holdings, Inc. to determine if the PhP
of HLI. DAR shall immediately schedule meetings with the said 6,296 FWBs and 1,330,511,500 proceeds of the sale of the three (3) aforementioned lots were used or
explain to them the effects, consequences and legal or practical implications of their spent for legitimate corporate purposes. Any unspent or unused balance as
choice, after which the FWBs will be asked to manifest, in secret voting, their choices determined by the audit shall be distributed to the 6,296 original FWBs.
in the ballot, signing their signatures or placing their thumbmarks, as the case may
be, over their printed names. HLI is entitled to just compensation for the agricultural land that will be transferred to
DAR to be reckoned from November 21, 1989 per PARC Resolution No. 89-12-2.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is DAR and LBP are ordered to determine the compensation due to HLI.
entitled to 18,804.32 HLI shares, and, in case the HLI shares already given to him or
her is less than 18,804.32 shares, the HLI is ordered to issue or distribute additional DAR shall submit a compliance report after six (6) months from finality of this
shares to complete said prescribed number of shares at no cost to the FWB within judgment. It shall also submit, after submission of the compliance report, quarterly
thirty (30) days from finality of this Decision. Other FWBs who do not belong to the reports on the execution of this judgment to be submitted within the first 15 days at
original 6,296 qualified beneficiaries are not entitled to land distribution and shall the end of each quarter, until fully implemented.
remain as HLI shareholders. All salaries, benefits, 3% production share and 3% share
in the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare
SCTEX lot and homelots already received by the 10,502 FWBs, composed of 6,296 The temporary restraining order is lifted.
original FWBs and 4,206 non-qualified FWBs, shall be respected with no obligation to
refund or return them. SO ORDERED.

Within thirty (30) days after determining who from among the original FWBs will stay
as stockholders, DAR shall segregate from the HLI agricultural land with an area of
4,915.75 hectares subject of PARC’s SDP-approving Resolution No. 89-12-2 the
following: (a) the 500-hectare lot subject of the August 14, l996 Conversion Order; (b)
the 80.51-hectare lot sold to, or acquired by, the government as part of the SCTEX
complex; and (c) the aggregate area of 6,886.5 square meters of individual lots that
each FWB is entitled to under the CARP had he or she not opted to stay in HLI as a
stockholder. After the segregation process, as indicated, is done, the remaining area
shall be turned over to DAR for immediate land distribution to the original qualified
FWBs who opted not to remain as HLI stockholders.

The aforementioned area composed of 6,886.5-square meter lots allotted to the


FWBs who stayed with the corporation shall form part of the HLI assets.

HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000 received
by it from Luisita Realty, Inc. for the sale to the latter of 200 hectares out of the 500
hectares covered by the August 14, 1996 Conversion Order, the consideration of PhP
750,000,000 received by its owned subsidiary, Centennary Holdings, Inc. for the sale
of the remaining 300 hectares of the aforementioned 500-hectare lot to Luisita
Industrial Park Corporation, and the price of PhP 80,511,500 paid by the government
through the Bases Conversion Development Authority for the sale of the 80.51-
hectare lot used for the construction of the SCTEX road network. From the total
amount of PhP 1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP
80,511,500 = PhP 1,330,511,500) shall be deducted the 3% of the total gross sales
from the production of the agricultural land and the 3% of the proceeds of said
transfers that were paid to the FWBs, the taxes and expenses relating to the transfer
of titles to the transferees, and the expenditures incurred by HLI and Centennary
Holdings, Inc. for legitimate corporate purposes. For this purpose, DAR is ordered to
51

Subject of this petition are four (4) parcels of land with an aggregate area of 160.1161
hectares registered in the name of Salvador N. Lopez Agri-Business Corporation.
Said parcels of land are hereinafter described as follows:

1avvphi1
Title No. Area Location
TCT No. T-12635 (Lot 1454-A 49.5706 Bo. Limot, Mati, Davao
& 1296) has. Oriental
THIRD DIVISION TCT No. T-12637 (Lot 1298) 42.6822 Bo. Don Enrique Lopez, Mati,
has. Dvo. Or.
G.R. No. 178895 January 10, 2011 TCT No. T-12639 (Lot 1293- 67.8633 Bo. Don Enrique Lopez, Mati,
B) has. Dvo. Or.
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF
AGRARIAN REFORM, through the HON. SECRETARY NASSER C.
On August 2, 1991, Municipal Agrarian Reform Officer (MARO) Socorro C. Salga
PANGANDAMAN, Petitioner,
issued a Notice of Coverage to petitioner with regards (sic) to the aforementioned
vs.
landholdings which were subsequently placed under Compulsory Acquisition
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N.
pursuant to R.A. 6657 (Comprehensive Agrarian Reform Law).
LOPEZ, JR., President and General Manager, Respondent.

On December 10, 1992, petitioner filed with the Provincial Agrarian Reform Office
x - - - - - - - - - - - - - - - - - - - - - - -x
(PARO), Davao Oriental, an Application for Exemption of the lots covered by TCT No.
T-12637 and T-12639 from CARP coverage. It alleged that pursuant to the case of
G.R. No. 179071 Luz Farms v. DAR Secretary said parcels of land are exempted from coverage as the
said parcels of land with a total area of 110.5455 hectares are used for grazing and
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. habitat of petitioner’s 105 heads of cattle, 5 carabaos, 11 horses, 9 heads of goats
LOPEZ, JR., President and General Manager, Petitioner, and 18 heads of swine, prior to the effectivity of the Comprehensive Agrarian Reform
vs. Law (CARL).
DEPARTMENT OF AGRARIAN REFORM, through the Honorable
Secretary, Respondent. On December 13, 1992 and March 1, 1993, the MARO conducted an onsite
investigation on the two parcels of land confirming the presence of the livestock as
DECISION enumerated. The Investigation Report dated March 9, 1993 stated:

SERENO, J.: That there are at least 2[5] to 30 heads of cows that farrow every year and if the trend
of farrowing persist (sic), then the cattle shall become overcrowded and will result to
scarcity of grasses for the cattle to graze;
Before us are two Rule 45 Petitions1 filed separately by the Department of Agrarian
Reform (DAR), through the Office of the Solicitor General, and by the Salvador N.
Lopez Agri-Business Corp. (SNLABC). Each Petition partially assails the Court of That during the week cycle, the herds are being moved to the different adjacent lots
Appeals Decision dated 30 June 20062 with respect to the application for exemption owned by the corporation. It even reached Lot 1454-A and Lot 1296. Thereafter, the
of four parcels of land - located in Mati, Davao Oriental and owned by SNLABC - from herds are returned to their respective night chute corrals which are constructed under
Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law Lot 1293-B and Lot 1298.
(CARL).
xxx
There is little dispute as to the facts of the case, as succinctly discussed by the Court
of Appeals and adopted herein by the Court, to wit: That the age of coconut trees planted in the area are already 40 to 50 years and have
been affected by the recent drought that hit the locality.
52

That the presence of livestocks (sic) have already existed in the area prior to the Undaunted, petitioner appealed the Regional Director’s Orders to respondent DAR.
Supreme Court decision on LUZ FARMS vs. Secretary of Agrarian Reform. We were On June 10, 1998, the latter issued its assailed Order affirming the Regional
surprised however, why the management of the corporation did not apply for Director’s ruling on Lots 1454-A & 1296 and further declared Lots 1298 and 1293-B
Commercial Farm Deferment (CFD) before, when the two years reglamentary (sic) as covered by the CARP. Respondent ruled in this wise considering the documentary
period which the landowner was given the chance to file their application pursuant to evidence presented by petitioner such as the Business Permit to engage in livestock,
R.A. 6657, implementing Administrative Order No. 16, Series of 1989; the certification of ownership of large cattle and the Corporate Income Tax Returns,
which were issued during the effectivity of the Agrarian Reform Law thereby
However, with regards to what venture comes (sic) first, coconut or livestocks (sic), debunking petitioner’s claim that it has been engaged in livestock farming since the
majority of the farmworkers including the overseer affirmed that the coconut trees and 1960s. Respondent further ruled that the incorporation by the Lopez family on
livestocks (sic) were (sic) simultaneously and all of these were inherited by his February 12, 1988 or four (4) months before the effectivity of R.A. 6657 was an
(applicant) parent. In addition, the financial statement showed 80% of its annual attempt to evade the noble purposes of the said law.
income is derived from the livestocks (sic) and only 20% from the coconut industry.
On October 17, 2002, petitioner’s Motion for Reconsideration was denied by
Cognitive thereto, we are favorably recommending for the exemption from the respondent prompting the former to file the instant petition. 3
coverage of CARP based on LUZ FARMS as enunciated by the Supreme Court the
herein Lot No. 1293-B Psd-65835 under TCT No. T-12639 except Lot No. 1298, Cad. In the assailed Decision dated 30 June 2006,4 the Court of Appeals partially granted
286 of TCT No. T-12637 which is already covered under the Compulsory Acquisition the SNLABC Petition and excluded the two (2) parcels of land (Transfer Certificate of
(CA) Scheme and had already been valued by the Land Valuation Office, Land Bank Title [TCT] Nos. T-12637 and T-12639) located in Barrio Don Enrique Lopez (the
of the Philippines. "Lopez lands") from coverage of the CARL.
However, it upheld the Decisions of the Regional Director 5 and the DAR6 Secretary
On June 24, 1993, TCT No. T-12635 covering Lots 1454-A & 1296 was cancelled and denying the application for exemption with respect to Lots 1454-A and 1296
a new one issued in the name of the Republic of the Philippines under RP T-16356. (previously under TCT No. T-12635) in Barrio Limot (the "Limot lands"). These lots
On February 7, 1994, petitioner through its President, Salvador N. Lopez, Jr., were already covered by a new title under the name of the Republic of the Philippines
executed a letter-affidavit addressed to the respondent-Secretary requesting for the (RP T-16356).
exclusion from CARP coverage of Lots 1454-A and 1296 on the ground that they
needed the additional area for its livestock business. On March 28, 1995, petitioner The DAR and SNLABC separately sought a partial reconsideration of the assailed
filed before the DAR Regional Director of Davao City an application for the exemption Decision of the Court of Appeals, but their motions for reconsideration were
from CARP coverage of Lots 1454-A and 1296 stating that it has been operating subsequently denied in the Court of Appeals Resolution dated 08 June 2007. 7
grazing lands even prior to June 15, 1988 and that the said two (2) lots form an
integral part of its grazing land. The DAR and SNLABC elevated the matter to this Court by filing separate Rule 45
Petitions (docketed as G.R. No. 1788958 and 179071,9 respectively), which were
The DAR Regional Director, after inspecting the properties, issued an Order dated subsequently ordered consolidated by the Court.
March 5, 1997 denying the application for exemption of Lots 1454-A and 1296 on the
ground that it was not clearly shown that the same were actually, directly and The main issue for resolution by the Court is whether the Lopez and Limot lands of
exclusively used for livestock raising since in its application, petitioner itself admitted SNLABC can be considered grazing lands for its livestock business and are thus
that it needs the lots for additional grazing area. The application for exemption, exempted from the coverage of the CARL under the Court’s ruling in Luz Farms v.
however of the other two (2) parcels of land was approved. DAR.10 The DAR questions the disposition of the Court of Appeals, insofar as the
latter allowed the exemption of the Lopez lands, while SNLABC assails the inclusion
On its partial motion for reconsideration, petitioner argued that Lots 1454-A & 1296 of the Limot lands within the coverage of the CARL.
were taken beyond the operation of the CARP pursuant to its reclassification to a
Pollutive Industrial District (Heavy Industry) per Resolution No. 39 of the Sangguniang The Court finds no reversible error in the Decision of the Court of Appeals and
Bayan of Mati, Davao Oriental, enacted on April 7, 1992. The DAR Regional Director dismisses the Petitions of DAR and SNLABC.
denied the Motion through an Order dated September 4, 1997, ratiocinating that the
reclassification does not affect agricultural lands already issued a Notice of Coverage
as provided in Memorandum Circular No. 54-93: Prescribing the Guidelines Preliminarily, in a petition for review on certiorari filed under Rule 45, the issues that
Governing Section 20 of R.A. 7160. can be raised are, as a general rule, limited to questions of law. 11 However, as
pointed out by both the DAR and SNLABC, there are several recognized exceptions
wherein the Court has found it appropriate to re-examine the evidence presented.12 In
53

this case, the factual findings of the DAR Regional Director, the DAR Secretary and In the instant case, the MARO in its ocular inspection22 found on the Lopez lands
the CA are contrary to one another with respect to the following issue: whether the several heads of cattle, carabaos, horses, goats and pigs, some of which were
Lopez lands were actually, directly and exclusively used for SNLABC’s livestock covered by several certificates of ownership. There were likewise structures on the
business; and whether there was intent to evade coverage from the Comprehensive Lopez lands used for its livestock business, structures consisting of two chutes where
Agrarian Reform Program (CARP) based on the documentary evidence. On the other the livestock were kept during nighttime. The existence of the cattle prior to the
hand, SNLABC argues that these authorities misapprehended and overlooked certain enactment of the CARL was positively affirmed by the farm workers and the overseer
relevant and undisputed facts as regards the inclusion of the Limot lands under the who were interviewed by the MARO. Considering these factual findings and the fact
CARL. These circumstances fall within the recognized exceptions and, thus, the that the lands were in fact being used for SNLABC’s livestock business even prior to
Court is persuaded to review the facts and evidence on record in the disposition of 15 June 1988, the DAR Regional Director ordered the exemption of the Lopez lands
these present Petitions. from CARP coverage. The Court gives great probative value to the actual, on-site
investigation made by the MARO as affirmed by the DAR Regional Director. The
The Lopez lands of SNLABC are actually and directly being used for livestock and are Court finds that the Lopez lands were in fact actually, directly and exclusively being
thus exempted from the coverage of the CARL. used as industrial lands for livestock-raising.

Briefly stated, the DAR questions the object or autoptic evidence relied upon by the Simply because the on-site investigation was belatedly conducted three or four years
DAR Regional Director in concluding that the Lopez lands were actually, directly and after the effectivity of the CARL does not perforce make it unworthy of belief or unfit to
exclusively being used for SNLABC’s livestock business prior to the enactment of the be offered as substantial evidence in this case. Contrary to DAR’s claims, the lack of
CARL. information as regards the initial breeders and the specific date when the cattle were
first introduced in the MARO’s Report does not conclusively demonstrate that there
was no livestock-raising on the Lopez lands prior to the CARL. Although information
In Luz Farms v. Secretary of the Department of Agrarian Reform, 13 the Court declared as to these facts are significant, their non-appearance in the reports does not leave
unconstitutional the CARL provisions14 that included lands devoted to livestock under the MARO without any other means to ascertain the duration of livestock-raising on
the coverage of the CARP. The transcripts of the deliberations of the Constitutional the Lopez lands, such as interviews with farm workers, the presence of livestock
Commission of 1986 on the meaning of the word "agricultural" showed that it was infrastructure, and evidence of sales of cattle – all of which should have formed part
never the intention of the framers of the Constitution to include the livestock and of the MARO’s Investigation Report.
poultry industry in the coverage of the constitutionally mandated agrarian reform
program of the government.15 Thus, lands devoted to the raising of livestock, poultry
and swine have been classified as industrial, not agricultural, and thus exempt from Hence, the Court looks with favor on the expertise of the MARO in determining
agrarian reform.16 whether livestock-raising on the Lopez lands has only been recently conducted or has
been a going concern for several years already. Absent any clear showing of grave
abuse of discretion or bias, the findings of the MARO - as affirmed by the DAR
Under the rules then prevailing, it was the Municipal Agrarian Reform Officer (MARO) Regional Director - are to be accorded great probative value, owing to the
who was primarily responsible for investigating the legal status, type and areas of the presumption of regularity in the performance of his official duties.23
land sought to be excluded;17 and for ascertaining whether the area subject of the
application for exemption had been devoted to livestock-raising as of 15 June
1988.18 The MARO’s authority to investigate has subsequently been replicated in the The DAR, however, insisted in its Petition24 on giving greater weight to the
current DAR guidelines regarding lands that are actually, directly and exclusively inconsistencies appearing in the documentary evidence presented, and noted by the
used for livestock raising.19 As the primary official in charge of investigating the land DAR Secretary, in order to defeat SNLABC’s claim of exemption over the Lopez
sought to be exempted as livestock land, the MARO’s findings on the use and nature lands. The Court is not so persuaded.
of the land, if supported by substantial evidence on record, are to be accorded greater
weight, if not finality. In the Petition, the DAR argued that that the tax declarations covering the Lopez
lands characterized them as agricultural lands and, thus, detracted from the claim that
Verily, factual findings of administrative officials and agencies that have acquired they were used for livestock purposes. The Court has since held that "there is no law
expertise in the performance of their official duties and the exercise of their primary or jurisprudence that holds that the land classification embodied in the tax
jurisdiction are generally accorded not only respect but, at times, even finality if such declarations is conclusive and final nor would proscribe any further inquiry"; hence,
findings are supported by substantial evidence.20 The Court generally accords great "tax declarations are clearly not the sole basis of the classification of a
respect, if not finality, to factual findings of administrative agencies because of their land."25 Applying the foregoing principles, the tax declarations of the Lopez lands as
special knowledge and expertise over matters falling under their jurisdiction. 21 agricultural lands are not conclusive or final, so as to prevent their exclusion from
CARP coverage as lands devoted to livestock-raising. Indeed, the MARO’s on-site
inspection and actual investigation showing that the Lopez lands were being used for
54

livestock-grazing are more convincing in the determination of the nature of those There can be no presumption, other than that the "coconut area" is indeed used for
lands.lavvphil shade and to augment the supply of fodder during the warm months; any other use
would be only be incidental to livestock farming. The substantial quantity of livestock
Neither can the DAR in the instant case assail the timing of the incorporation of heads could only mean that respondent is engaged in farming for this purpose. The
SNLABC and the latter’s operation shortly before the enactment of the CARL. That single conclusion gathered here is that the land is entirely devoted to livestock
persons employ tactics to precipitously convert their lands from agricultural use to farming and exempted from the CARP.
industrial livestock is not unheard of; they even exploit the creation of a new corporate
vehicle to operate the livestock business to substantiate the deceitful conversion in On the assumption that five thousand five hundred forty-eight (5,548) coconut trees
the hopes of evading CARP coverage. Exemption from CARP, however, is directly a were existing on the Lopez land (TCT No. T-12637), the DAR did not refute the
function of the land’s usage, and not of the identity of the entity operating it. findings of the MARO that these coconut trees were merely incidental. Given the
Otherwise stated, lands actually, directly and exclusively used for livestock are number of livestock heads of SNLABC, it is not surprising that the areas planted with
exempt from CARP coverage, regardless of the change of owner.26 In the instant coconut trees on the Lopez lands where forage grass grew were being used as
case, whether SNLABC was incorporated prior to the CARL is immaterial, since the grazing areas for the livestock. It was never sufficiently adduced that SNLABC was
Lopez lands were already being used for livestock-grazing purposes prior to the primarily engaged in agricultural business on the Lopez lands, specifically, coconut-
enactment of the CARL, as found by the MARO. Although the managing entity had harvesting. Indeed, the substantial quantity of SNLABC’s livestock amounting to a
been changed, the business interest of raising livestock on the Lopez lands still little over one hundred forty (140) livestock heads, if measured against the combined
remained without any indication that it was initiated after the effectivity of the CARL. 110.5455 hectares of land and applying the DAR-formulated ratio, leads to no other
conclusion than that the Lopez lands were exclusively devoted to livestock farming. 29
As stated by SNLABC, the Lopez lands were the legacy of Don Salvador Lopez, Sr.
The ownership of these lands was passed from Don Salvador Lopez, Sr., to Salvador In any case, the inconsistencies appearing in the documentation presented (albeit
N. Lopez, Jr., and subsequently to the latter’s children before being registered under sufficiently explained) pale in comparison to the positive assertion made by the
the name of SNLABC. Significantly, SNLABC was incorporated by the same MARO in its on-site, actual investigation - that the Lopez lands were being used
members of the Lopez family, which had previously owned the lands and managed actually, directly and exclusively for its livestock-raising business. The Court affirms
the livestock business.27 In all these past years, despite the change in ownership, the the findings of the DAR Regional Director and the Court of Appeals that the Lopez
Lopez lands have been used for purposes of grazing and pasturing cattle, horses, lands were actually, directly and exclusively being used for SNLABC’s livestock
carabaos and goats. Simply put, SNLABC was chosen as the entity to take over the business and, thus, are exempt from CARP coverage.
reins of the livestock business of the Lopez family. Absent any other compelling
evidence, the inopportune timing of the incorporation of the SNLABC prior to the The Limot lands of SNLABC are not actually and directly being used for livestock and
enactment of the CARL was not by itself a categorical manifestation of an intent to should thus be covered by the CARL.
avoid CARP coverage.
In contrast, the Limot lands were found to be agricultural lands devoted to coconut
Furthermore, the presence of coconut trees, although an indicia that the lands may be trees and rubber and are thus not subject to exemption from CARP coverage.
agricultural, must be placed within the context of how they figure in the actual, direct
and exclusive use of the subject lands. The DAR failed to demonstrate that the Lopez
lands were actually and primarily agricultural lands planted with coconut trees. This is In the Report dated 06 April 1994, the team that conducted the inspection found that
in fact contradicted by the findings of its own official, the MARO. Indeed, the DAR did the entire Limot lands were devoted to coconuts (41.5706 hectares) and rubber
not adduce any proof to show that the coconut trees on the Lopez lands were used (8.000 hectares) and recommended the denial of the application for
for agricultural business, as required by the Court in DAR v. Uy, 28 wherein we ruled exemption.30 Verily, the Limot lands were actually, directly and exclusively used for
thus: agricultural activities, a fact that necessarily makes them subject to the CARP. These
findings of the inspection team were given credence by the DAR Regional Director
who denied the application, and were even subsequently affirmed by the DAR
It is not uncommon for an enormous landholding to be intermittently planted with Secretary and the Court of Appeals.
trees, and this would not necessarily detract it from the purpose of livestock farming
and be immediately considered as an agricultural land. It would be surprising if there
were no trees on the land. Also, petitioner did not adduce any proof to show that the SNLABC argues that the Court of Appeals misapprehended the factual circumstances
coconut trees were planted by respondent and used for agricultural business or were and overlooked certain relevant facts, which deserve a second look. SNLABC’s
already existing when the land was purchased in 1979. In the present case, the area arguments fail to convince the Court to reverse the rulings of the Court of Appeals.
planted with coconut trees bears an insignificant value to the area used for the cattle
and other livestock-raising, including the infrastructure needed for the business.
55

In the 07 February 1994 Letter-Affidavit addressed to the DAR Secretary, SNLABC The confluence of these factual circumstances leads to the logical conclusion that the
requested the exemption of the Limot lands on the ground that the corporation Limot lands were not being used for livestock grazing and, thus, do not qualify for
needed the additional area for its livestock business. As pointed out by the DAR exemption from CARP coverage. SNLABC’s belated filing of the application for
Regional Director, this Letter-Affidavit is a clear indication that the Limot lands were exemption of the Limot lands was a ruse to increase its retention of its landholdings
not directly, actually and exclusively used for livestock raising. SNLABC casually and an attempt to "save" these from compulsory acquisition.
dismisses the clear import of their Letter-Affidavit as a "poor choice of words."
Unfortunately, the semantics of the declarations of SNLABC in its application for WHEREFORE, the Petitions of the Department of Agrarian Reform and the Salvador
exemption are corroborated by the other attendant factual circumstances and indicate N. Lopez Agri-Business Corp. are DISMISSED, and the rulings of the Court of
its treatment of the subject properties as non-livestock. Appeals and the DAR Regional Director are hereby AFFIRMED.

Verily, the MARO itself, in the Investigation Report cited by no less than SNLABC, SO ORDERED.
found that the livestock were only moved to the Limot lands sporadically and were not
permanently designated there. The DAR Secretary even described SNLABC’s use of
the area as a "seasonal extension of the applicant’s ‘grazing lands’ during the MARIA LOURDES P. A. SERENO
summer." Therefore, the Limot lands cannot be claimed to have been actually,
directly and exclusively used for SNLABC’s livestock business, especially since these
were only intermittently and secondarily used as grazing areas. The said lands are
more suitable -- and are in fact actually, directly and exclusively being used -- for
agricultural purposes.

SNLABC’s treatment of the land for non-livestock purposes is highlighted by its undue
delay in filing the application for exemption of the Limot lands. SNLABC filed the
application only on 07 February 1994, or three years after the Notice of Coverage
was issued; two years after it filed the first application for the Lopez lands; and a year
after the titles to the Limot lands were transferred to the Republic. The SNLABC slept
on its rights and delayed asking for exemption of the Limot lands. The lands were
undoubtedly being used for agricultural purposes, not for its livestock business; thus,
these lands are subject to CARP coverage. Had SNLABC indeed utilized the Limot
lands in conjunction with the livestock business it was conducting on the adjacent
Lopez lands, there was nothing that would have prevented it from simultaneously EN BANC
applying for a total exemption of all the lands necessary for its livestock.
G.R. No. 162070 October 19, 2005
The defense of SNLABC that it wanted to "save" first the Lopez lands where the
corrals and chutes were located, before acting to save the other properties does not DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE
help its cause. The piecemeal application for exemption of SNLABC speaks of the MARI B. PONCE (OIC), Petitioner
value or importance of the Lopez lands, compared with the Limot lands, with respect vs.
to its livestock business. If the Lopez and the Limot lands were equally significant to DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T.
its operations and were actually being used for its livestock business, it would have SUTTON, Respondents.
been more reasonable for it to apply for exemption for the entire lands. Indeed, the
belated filing of the application for exemption was a mere afterthought on the part of
DECISION
SNLABC, which wanted to increase the area of its landholdings to be exempted from
CARP on the ground that these were being used for its livestock business.
PUNO, J.:
In any case, SNLABC admits that the title to the Limot lands has already been
transferred to the Republic and subsequently awarded to SNLABC’s farm This is a petition for review filed by the Department of Agrarian Reform (DAR) of the
workers.31 This fact only demonstrates that the land is indeed being used for Decision and Resolution of the Court of Appeals, dated September 19, 2003 and
agricultural activities and not for livestock grazing. February 4, 2004, respectively, which declared DAR Administrative Order (A.O.) No.
9, series of 1993, null and void for being violative of the Constitution.
56

The case at bar involves a land in Aroroy, Masbate, inherited by respondents which maximum of 102.5635 hectares for infrastructure. Petitioner ordered the rest of
has been devoted exclusively to cow and calf breeding. On October 26, 1987, respondents’ landholding to be segregated and placed under Compulsory Acquisition.
pursuant to the then existing agrarian reform program of the government,
respondents made a voluntary offer to sell (VOS)1 their landholdings to petitioner Respondents moved for reconsideration. They contend that their entire landholding
DAR to avail of certain incentives under the law. should be exempted as it is devoted exclusively to cattle-raising. Their motion was
denied.8 They filed a notice of appeal9 with the Office of the President assailing: (1)
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the reasonableness and validity of DAR A.O. No. 9, s. 1993, which provided for a
the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in ratio between land and livestock in determining the land area qualified for exclusion
its coverage farms used for raising livestock, poultry and swine. from the CARL, and (2) the constitutionality of DAR A.O. No. 9, s. 1993, in view of
the Luz Farms case which declared cattle-raising lands excluded from the coverage
On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of agrarian reform.
of DAR,2 this Court ruled that lands devoted to livestock and poultry-raising are not
included in the definition of agricultural land. Hence, we declared as unconstitutional On October 9, 2001, the Office of the President affirmed the impugned Order of
certain provisions of the CARL insofar as they included livestock farms in the petitioner DAR.10 It ruled that DAR A.O. No. 9, s. 1993, does not run counter to
coverage of agrarian reform. the Luz Farms case as the A.O. provided the guidelines to determine whether a
certain parcel of land is being used for cattle-raising. However, the issue on the
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal constitutionality of the assailed A.O. was left for the determination of the courts
request to withdraw their VOS as their landholding was devoted exclusively to cattle- as the sole arbiters of such issue.
raising and thus exempted from the coverage of the CARL.3
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR
On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, A.O. No. 9, s. 1993, void for being contrary to the intent of the 1987 Constitutional
inspected respondents’ land and found that it was devoted solely to cattle-raising and Commission to exclude livestock farms from the land reform program of the
breeding. He recommended to the DAR Secretary that it be exempted from the government. The dispositive portion reads:
coverage of the CARL.
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their 1993 is hereby DECLARED null and void. The assailed order of the Office of the
VOS and requested the return of the supporting papers they submitted in connection President dated 09 October 2001 in so far as it affirmed the Department of Agrarian
therewith.4 Petitioner ignored their request. Reform’s ruling that petitioners’ landholding is covered by the agrarian reform
program of the government is REVERSED and SET ASIDE.
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,5 which provided
that only portions of private agricultural lands used for the raising of livestock, poultry SO ORDERED.11
and swine as of June 15, 1988 shall be excluded from the coverage of the CARL. In
determining the area of land to be excluded, the A.O. fixed the following retention Hence, this petition.
limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1 head of animal shall be
retained by the landowner), and a ratio of 1.7815 hectares for livestock infrastructure The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of
for every 21 heads of cattle shall likewise be excluded from the operations of the 1993, which prescribes a maximum retention limit for owners of lands devoted to
CARL. livestock raising.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to Invoking its rule-making power under Section 49 of the CARL, petitioner submits that
consider as final and irrevocable the withdrawal of their VOS as, under the Luz it issued DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a
Farms doctrine, their entire landholding is exempted from the CARL.6 landowner pursuant to its mandate to place all public and private agricultural lands
under the coverage of agrarian reform. Petitioner also contends that the A.O. seeks to
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an remedy reports that some unscrupulous landowners have converted their agricultural
Order7 partially granting the application of respondents for exemption from the farms to livestock farms in order to evade their coverage in the agrarian reform
coverage of CARL. Applying the retention limits outlined in the DAR A.O. No. 9, program.
petitioner exempted 1,209 hectares of respondents’ land for grazing purposes, and a
57

Petitioner’s arguments fail to impress. classified as mineral, forest, residential, commercial or industrial. Thus,
in Natalia Realty, even portions of the Antipolo Hills Subdivision, which are arable
Administrative agencies are endowed with powers legislative in nature, i.e., the power yet still undeveloped, could not be considered as agricultural lands subject to
to make rules and regulations. They have been granted by Congress with the agrarian reform as these lots were already classified as residential lands.
authority to issue rules to regulate the implementation of a law entrusted to them.
Delegated rule-making has become a practical necessity in modern governance due A similar logical deduction should be followed in the case at bar. Lands devoted to
to the increasing complexity and variety of public functions. However, while raising of livestock, poultry and swine have been classified as industrial, not
administrative rules and regulations have the force and effect of law, they are not agricultural, lands and thus exempt from agrarian reform. Petitioner DAR argues that,
immune from judicial review.12 They may be properly challenged before the courts to in issuing the impugned A.O., it was seeking to address the reports it has received
ensure that they do not violate the Constitution and no grave abuse of administrative that some unscrupulous landowners have been converting their agricultural lands to
discretion is committed by the administrative body concerned. livestock farms to avoid their coverage by the agrarian reform. Again, we find neither
merit nor logic in this contention. The undesirable scenario which petitioner seeks
The fundamental rule in administrative law is that, to be valid, administrative rules to prevent with the issuance of the A.O. clearly does not apply in this
and regulations must be issued by authority of a law and must not contravene the case. Respondents’ family acquired their landholdings as early as 1948. They have
provisions of the Constitution.13 The rule-making power of an administrative long been in the business of breeding cattle in Masbate which is popularly known as
agency may not be used to abridge the authority given to it by Congress or by the the cattle-breeding capital of the Philippines.18 Petitioner DAR does not dispute this
Constitution. Nor can it be used to enlarge the power of the administrative fact. Indeed, there is no evidence on record that respondents have just recently
agency beyond the scope intended. Constitutional and statutory provisions engaged in or converted to the business of breeding cattle after the enactment of the
control with respect to what rules and regulations may be promulgated by CARL that may lead one to suspect that respondents intended to evade its coverage.
administrative agencies and the scope of their regulations.14 It must be stressed that what the CARL prohibits is the conversion of agricultural
lands for non-agricultural purposes after the effectivity of the CARL. There has
been no change of business interest in the case of respondents.
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the
Constitution. The A.O. sought to regulate livestock farms by including them in the
coverage of agrarian reform and prescribing a maximum retention limit for their Moreover, it is a fundamental rule of statutory construction that the reenactment of a
ownership. However, the deliberations of the 1987 Constitutional Commission statute by Congress without substantial change is an implied legislative approval and
show a clear intent to exclude, inter alia, all lands exclusively devoted to adoption of the previous law. On the other hand, by making a new law, Congress
livestock, swine and poultry- raising. The Court clarified in the Luz seeks to supersede an earlier one.19 In the case at bar, after the passage of the 1988
Farms case that livestock, swine and poultry-raising are industrial activities and do CARL, Congress enacted R.A. No. 788120 which amended certain provisions of the
not fall within the definition of "agriculture" or "agricultural activity." The raising of CARL. Specifically, the new law changed the definition of the terms "agricultural
livestock, swine and poultry is different from crop or tree farming. It is an industrial, activity" and "commercial farming" by dropping from its coverage lands that
not an agricultural, activity. A great portion of the investment in this enterprise is in the are devoted to commercial livestock, poultry and swine-raising.21 With this
form of industrial fixed assets, such as: animal housing structures and facilities, significant modification, Congress clearly sought to align the provisions of our
drainage, waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts agrarian laws with the intent of the 1987 Constitutional Commission to exclude
and generators, extensive warehousing facilities for feeds and other supplies, anti- livestock farms from the coverage of agrarian reform.
pollution equipment like bio-gas and digester plants augmented by lagoons and
concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other In sum, it is doctrinal that rules of administrative bodies must be in harmony with the
technological appurtenances.15 provisions of the Constitution. They cannot amend or extend the Constitution. To be
valid, they must conform to and be consistent with the Constitution. In case of conflict
Clearly, petitioner DAR has no power to regulate livestock farms which have between an administrative order and the provisions of the Constitution, the latter
been exempted by the Constitution from the coverage of agrarian reform. It has prevails.22 The assailed A.O. of petitioner DAR was properly stricken down as
exceeded its power in issuing the assailed A.O. unconstitutional as it enlarges the coverage of agrarian reform beyond the scope
intended by the 1987 Constitution.
The subsequent case of Natalia Realty, Inc. v. DAR16 reiterated our ruling in the Luz
Farms case. In Natalia Realty, the Court held that industrial, commercial and IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and
residential lands are not covered by the CARL.17 We stressed anew that while Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
Section 4 of R.A. No. 6657 provides that the CARL shall cover all public and respectively, are AFFIRMED. No pronouncement as to costs.
private agricultural lands, the term "agricultural land" does not include lands
58

SO ORDERED. THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA,


ROGELIO MACATULAD and MANUEL UMALI, respondents.
REYNATO S. PUNO
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of


Appeals2 dated January 28, 1998 which denied the application of petitioner heirs of
Eudosia Daez for the retention of a 4.1685-hectare riceland pursuant to Republic Act
(R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law3,
thereby reversing the Decision4 of then Executive Secretary Ruben D. Torres and the
Order5 of then Deputy Executive Secretary Renato C. Corona, both of which had
earlier set aside the Resolution6 and Order7 of then Department of Agrarian Reform
(DAR) Secretary Ernesto D. Garilao denying exemption of the same riceland from
coverage under Presidential Decree (P.D.) No. 27.

The pertinent facts are:

Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in


Barangay Lawa, Meycauayan, Bulacan which was being cultivated by respondents
Macario Soriente, Rogelio Macatulad, Apolonio Mediana and Manuel Umali under a
system of share-tenancy. The said land was subjected to the Operation Land
Transfer (OLT) Program under Presidential Decree (P.D.) No. 278 as amended by
Letter of Instruction (LOI) No. 4749. Thus, the then Ministry of Agrarian Reform
acquired the subject land and issued Certificates of Land Transfer (CLT) on
December 9, 1980 to private respondents as beneficiaries.

However, on May 31, 1981, private respondents signed an affidavit, allegedly under
duress, stating that they are not share tenants but hired laborers 10. Armed with such
document, Eudosia Daez applied for the exemption of said riceland from coverage of
P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
private respondents.1âwphi1.nêt

In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope,
declared ownership over 41.8064 hectares of agricultural lands located in
Meycauayan, Bulacan and fourteen (14) hectares of riceland, sixteen (16) hectares of
forestland, ten (10) hectares of "batuhan" and 1.8064 hectares of residential
lands11 in Penaranda, Nueva Ecija. Included in their 41.8064-hectare landholding in
Bulacan, was the subject 4,1685-hectare riceland in Meycauayan.

On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying
SECOND DIVISION Eudosia Daez's application for exemption upon finding that her subject land is
covered under LOI No. 474, petitioner being owner of the aforesaid agricultural lands
G.R. No. 133507 February 17, 2000 exceeding seven (7) hectares12.

EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners, On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong
vs. requesting for reconsideration of Undersecretary Medina's order. But on January 16,
59

199213 Secretary Leong affirmed the assailed order upon finding private respondents WHEREFORE, the resolution and order appealed from are hereby SET
to be bonafide tenants of the subject land. Secretary Leong disregarded private ASIDE and judgment is rendered authorizing the retention by Eudosia Daez
respondents' May 31, 1981 affidavit for having been executed under duress because or her heirs of the 4.1685-hectare landholding subject thereof.
he found that Eudosia's son, Adriano, who was then the incumbent Vice-Mayor of
Meycauayan, pressured private respondents into signing the same. SO ORDERED.18

Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Aggrieved, private respondents sought from the Court of Appeals, a review of the
Appeals via a petition for certiorari. The Court of Appeals, however, sustained the decision of the Office of the President.
order of Secretary Leong in a decision dated April 29, 1992. Eudosia pursued her
petition before this court but we denied it in a minute resolution dated September 18,
1992. We also denied her motion for reconsideration on November 9, 1992. On January 28, 1999, the said Decision of the Office of the President was reversed.
The Court of Appeals ordered, thus:
Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to
private respondents. Thereafter, the Register of Deeds of Bulacan issued the WHEREFORE, the assailed decision of July 5, 1996 and Order dated
corresponding Transfer Certificates of Title (TCTs). October 23, 1996 of the public respondents are REVERSED AND SET
ASIDE, and the Resolution and Order of DAR Secretary Ernesto D. Garilao
respectively dated August 26, 1994 and January 19, 1995 are
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally REINSTATED.
denied her, Eudosia Daez next filed an application for retention of the same riceland,
this time under R.A. No. 6657.
SO ORDERED.
In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo
allowed Eudosia Daez to retain the subject riceland but he denied the application of Hence, this petition which assigns the following errors:
her eight (8) children to retain three (3) hectares each for their failure to prove actual
tillage of the land or direct management thereof as required by law14. Aggrieved, they I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
appealed to the DAR. DISTINCTION BETWEEN EXEMPTION FROM AGRARIAN REFORM COVERAGE
AND THE RIGHT OF RETENTION OF LANDOWNERS IS ONLY A MATTER OF
On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of SEMANTICS THAT AN ADVERSE DECISION IN THE FORMER WILL FORECLOSE
Regional Director Bernardo in a Resolution,15 the decretal portion of which reads, viz.: FURTHER ACTION TO ENFORCE THE LATTER CONSIDERING THAT THEY
CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND,
THEREFORE, ENFORCEABLE SEPARATELY AND IN SEQUEL.
WHEREFORE, premises considered, this Resolution is hereby issued
setting aside with FINALITY the Order dated March 22, 1994 of the Regional
Director of DAR Region III. II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE
PRINCIPLE OF RES JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE
CITED (EXEMPTION FROM COVERAGE DUE TO NON-TENANCY) AND THE
The records of this case is remanded to the Regional Office for immediate PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT CAUSES OF
implementation of the Order dated January 16, 1992 of this office as ACTION.
affirmed by the Court of Appeals and the Supreme Court.
III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED
SO ORDERED. THAT THERE WAS A CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS
TO APPLY FOR EXEMPTION OR RETENTION UNDER PD 27 AND THOSE WHO
Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, FAILED TO FILE THEIR APPLICATIONS/PETITIONS ARE DEEMED TO HAVE
199516. WAIVED THEIR RIGHTS.

She appealed Secretary Garilao's decision to the Office of the President which ruled IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT
in her favor. The dispositive portion of the Decision17 of then Executive Secretary PETITIONERS (RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.
reads:
60

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE Clearly, then, the requisites for the grant of an application for exemption from
LAND SUBJECT OF THIS CASE IS NO LONGER OWNED BY PETITIONERS coverage of OLT and those for the grant of an application for the exercise of a
SINCE PRIVATE RESPONDENTS HAVE ALREADY BEEN ISSUED NOT ONLY landowner's right of retention, are different.
THEIR RESPECTIVE CERTIFICATES OF LAND TRANSFER BUT ALSO THEIR
INDIVIDUAL CERTIFICATES OF TITLE OVER THE DISPUTED AREA.19 Hence, it is incorrect to posit that an application for exemption and an application for
retention are one and the same thing. Being distinct remedies, finality of judgment in
We grant the petition. one does not preclude the subsequent institution of the other. There was, thus, no
procedural impediment to the application filed by Eudosia Daez for the retention of
First. Exemption and retention in agrarian reform are two (2) distinct concepts. the subject 4.1865-hectare riceland, even after her appeal for exemption of the same
land was denied in a decision that became final and executory.
P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers
tenanted rice or corn lands. The requisites for coverage under the OLT program are Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over
the following: (1) the land must be devoted to rice or corn crops; and (2) there must the subject 4.1685 riceland.
be a system of share-crop or lease-tenancy obtaining therein. If either requisite is
absent, a landowner may apply for exemption. If either of these requisites is absent, The right of retention is a constitutionally guaranteed right, which is subject to
the land is not covered under OLT. Hence, a landowner need not apply for retention qualification by the legislature21. It serves to mitigate the effects of compulsory land
where his ownership over the entire landholding is intact and undisturbed. acquisition by balancing the rights of the landowner and the tenant and by
implementing the doctrine that social justice was not meant to perpetrate an injustice
P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the against the landowner22. A retained area, as its name denotes, is land which is not
land is irrigated, a three (3)-hectare lot constituting a family size farm. However, said supposed to anymore leave the landowner's dominion, thus sparing the government
law allows a covered landowner to retain not more than seven (7) hectares of his land from the inconvenience of taking land only to return it to the landowner afterwards,
if his aggregate landholding does not exceed twenty-four (24) hectares. Otherwise, which would be a pointless process.
his entire landholding is covered without him being entitled to any retention right 20.
In the landmark case of Association of Small Landowners in the
Consequently, a landowner may keep his entire covered landholding if its aggregate Phil., Inc. v. Secretary of Agrarian Reform23, we held that landowners who have not
size does not exceed the retention limit of seven (7) hectares. In effect, his land will yet exercised their retention rights under P.D. No. 27 are entitled to the new retention
not be covered at all by the OLT program although all requisites for coverage are rights under R.A. No. 665724. We disregarded the August 27, 1985 deadline imposed
present. LOI No. 474 clarified the effective coverage of OLT to include tenanted rice by DAR Administrative Order No. 1, series of 1985 on landowners covered by OLT.
or corn lands of seven (7) hectares or less, if the landowner owns other agricultural However, if a landowner filed his application for retention after August 27, 1985 but he
lands of more than seven (7) hectares. The term "other agricultural lands" refers to had previously filed the sworn statements required by LOI Nos. 41, 45 and 52, he is
lands other than tenanted rice or corn lands from which the landowner derives still entitled to the retention limit of seven (7) hectares under P.D. No. 27 25. Otherwise,
adequate income to support his family. he is only entitled to retain five (5) hectares under R.A. No. 6657.

Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not Sec. 6 of R.A. No. 6657, which provides, viz.:
devoted to rice or corn crops even if it is tenanted; or (2) the land is untenanted even
though it is devoted to rice or corn crops. Sec. 6. Retention Limits — Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or private
On the other hand, the requisites for the exercise by the landowner of his right of agricultural land, the size of which shall vary according to factors governing
retention are the following: (1) the land must be devoted to rice or corn crops; (2) a viable family-size, such as commodity produced, terrain, infrastructure,
there must be a system of share-crop or lease-tenancy obtaining therein; and (3) the and soil fertility as determined by the Presidential Agrarian Reform Council
size of the landholding must not exceed twenty-four (24) hectares, or it could be more (PARC) created hereunder, but in no case shall retention by the landowner
than twenty-four (24) hectares provided that at least seven (7) hectares thereof are exceed five (5) hectares. Three (3) hectares may be awarded to each child
covered lands and more than seven (7) hectares of it consist of "other agricultural of the landowner, subject to the following qualifications: (1) that he is at least
lands". fifteen (15) years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose land have been
covered by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original homestead
61

grantees or direct compulsory heirs who still own the original homestead at Under P.D. No. 27, beneficiaries are issued CLTs to entitle them to possess lands.
the time of the approval of this Act shall retain the same areas as long as Thereafter, they are issued Emancipation Patents (EPs) after compliance with all
they continue to cultivate said homestead. necessary conditions. Such EPs, upon their presentation to the Register of Deeds,
result in the issuance of the corresponding transfer certificates of title (TCT) in favor
The right to choose the area to be retained, which shall be compact or of the beneficiaries mentioned therein30.
contiguous, shall pertain to the landowner. Provided, however, That in case
the area selected for retention by the landowner is tenanted, the tenant shall Under R.A. No. 6657, the procedure has been simplified 31. Only Certificates of Land
have the option to choose whether to remain therein or be a beneficiary in Ownership Award (CLOAs) are issued, in lieu of EPs, after compliance with all
the same or another agricultural land with similar or comparable features. In prerequisites. Thereafter, upon presentation of the CLOAs to the Register of Deeds,
case the tenant chooses to remain in the retained area, he shall be TCTs are issued to the designated beneficiaries. CLTs are no longer issued.
considered a leaseholder and shall lose his right to be a beneficiary under
this Act. In case the tenant chooses to be a beneficiary in another The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the
agricultural land, he loses his right as a lease-holder to the land retained by landowner from retaining the area covered thereby. Under Administrative Order No.
the landowner. The tenant must exercise this option within a period of one 2, series of 199432, an EP or CLOA may be cancelled if the land covered is later
(1) year from the time the landowner manifests his choice of the area for found to be part of the landowner's retained area.
retention.
A certificate of title accumulates in one document a comprehensive statement of the
In all cases, the security of tenure of the farmers or farmworkers on the land status of the fee held by the owner of a parcel of land.33 As such, it is a mere
prior to the approval of this Act shall be respected. evidence of ownership and it does not constitute the title to the land itself. It cannot
confer title where no title has been acquired by any of the means provided by law34.
Upon the effectivity of this Act, any sale, disposition, lease, management
contract or transfer of possession of private lands executed by the original Thus, we had, in the past, sustained the nullification of a certificate of title issued
landowner in violation of this Act shall be null and void; Provided, however, pursuant to a homestead patent because the land covered was not part of the public
That those executed prior to this Act shall be valid only when registered with domain and as a result, the government had no authority to issue such patent in the
the Register of Deeds within a period of three (3) months after the effectivity first place35. Fraud in the issuance of the patent, is also a ground for impugning the
of this Act. Thereafter, all Register of Deeds shall inform the DAR within validity of a certificate of title36. In other words, the invalidity of the patent or title is
thirty (3) days of any transaction involving agricultural lands in excess of five sufficient basis for nullifying the certificate of title since the latter is merely an
(5) hectares26. evidence of the former.

defines the nature and incidents of a landowner's right of retention. For as long as the In the instant case, the CLTs of private respondents over the subject 4.1685-hectare
area to be retained is compact or contiguous and it does not exceed the retention riceland were issued without Eudosia Daez having been accorded her right of choice
ceiling of five (5) hectares, a landowner's choice of the area to be retained, must as to what to retain among her landholdings. The transfer certificates of title thus
prevail. Moreover, Administrative Order No. 4, series of 1991, 27 which supplies the issued on the basis of those CLTs cannot operate to defeat the right of the heirs of
details for the exercise of a landowner's retention rights, likewise recognizes no limit deceased Eudosia Daez to retain the said 4.1685 hectares of riceland.
to the prerogative of the landowner, although he is persuaded to retain other lands
instead to avoid dislocation of farmers.
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of
Appeals, dated January 28, 1998, is REVERSED and SET ASIDE and the Decision
Without doubt, this right of retention may be exercised over tenanted land despite of the Office of the President, dated July 5, 1996, is hereby REINSTATED. In the
even the issuance of Certificate of Land Transfer (CLT) to farmer- implementation of said decision, however, the Department of Agrarian Reform is
beneficiaries.28 What must be protected, however, is the right of the tenants to opt to hereby ORDERED to fully accord to private respondents their rights under Section 6
either stay on the land chosen to be retained by the landowner or be a beneficiary in of R.A. No. 6657.1âwphi1.nêt
another agricultural land with similar or comparable features. 29
No costs.
Finally. Land awards made pursuant to the government's agrarian reform program are
subject to the exercise by a landowner, who is so qualified, of his right of retention.
SO ORDERED.
62

verbal and written demands made by her, petitioners refused to vacate the subject
land.10

In their Answer,11 petitioners interposed the defense of agricultural tenancy. Lucia


claimed that she and her deceased husband, Serapio, entered the subject land with
the consent and permission of respondent’s predecessors-in-interest, siblings Cristino
and Sana Salvador, under the agreement that Lucia and Serapio would devote the
property to agricultural production and share the produce with the Salvador
siblings.12 Since there is a tenancy relationship between the parties, petitioners
argued that it is the Department of Agrarian Reform Adjudication Board (DARAB)
which has jurisdiction over the case and not the MTC.13

On July 10, 2003, the preliminary conference was terminated and the parties were
ordered to submit their respective position papers together with the affidavits of their
witnesses and other evidence to support their respective claims. 14

FIRST DIVISION
Ruling of the Municipal Trial Court

G.R. No. 171972 June 8, 2011


On September 10, 2003, the MTC promulgated a Decision15 finding the existence of
an agricultural tenancy relationship between the parties, and thereby, dismissing the
LUCIA RODRIGUEZ AND PRUDENCIA RODRIGUEZ, Petitioners, complaint for lack of jurisdiction. Pertinent portions of the Decision read:
vs.
TERESITA V. SALVADOR, Respondent.
Based on the facts presented, it is established that defendant Lucia Rodriguez and
her husband Serapio Rodriguez were instituted as agricultural tenants on the lot in
DECISION question by the original owner who was the predecessor-in-interest of herein plaintiff
Teresita Salvador. The consent given by [the]original owner to constitute [defendants]
DEL CASTILLO, J.: as agricultural tenants of subject landholdings binds plaintiff who as successor-in-
interest of the original owner Cristino Salvador steps into the latter’s shoes acquiring
not only his rights but also his obligations towards the herein defendants. In the
Agricultural tenancy is not presumed but must be proven by the person alleging it.
instant case, the consent to tenurial arrangement between the parties is inferred from
the fact that the plaintiff and her successors-in-interest had received their share of the
This Petition for Certiorari1 under Rule 65 of the Rules of Court assails the August 24, harvests of the property in dispute from the defendants.
2005 Decision2 and the February 20, 2006 Resolution3 of the Court of Appeals (CA)
in CA G.R. SP No. 86599. However, per Resolution4 of this Court dated August 30,
Moreover, dispossession of agricultural tenants can only be ordered by the Court for
2006, the instant petition shall be treated as a Petition for Review on Certiorari under
causes expressly provided under Sec. 36 of R.A. 3844. However, this Court has no
Rule 45 of the same Rules.
jurisdiction over detainer case involving agricultural tenants as ejectment and
dispossession of said tenants is within the primary and exclusive jurisdiction of the
Factual Antecedents Department of Agrarian Reform and Agricultural Board (DARAB). ([S]ee Sec. 1(1.4)
DARAB 2003 Rules of Procedure[.])
On May 22, 2003, respondent Teresita V. Salvador filed a Complaint for Unlawful
Detainer,5 docketed as Civil Case No. 330, against petitioners Lucia (Lucia) and WHEREFORE, in view of the foregoing, the instant complaint is hereby ordered
Prudencia Rodriguez, mother and daughter, respectively before the Municipal Trial DISMISSED for lack of jurisdiction.
Court (MTC) of Dalaguete, Cebu.6 Respondent alleged that she is the absolute owner
of a parcel of land covered by Original Certificate of Title (OCT) No. P-271407 issued
SO ORDERED.16
by virtue of Free Patent No. (VII-5) 2646 in the name of the Heirs of Cristino Salvador
represented by Teresita Salvador;8 that petitioners acquired possession of the subject
land by mere tolerance of her predecessors-in-interest;9 and that despite several
63

Aggrieved, respondent filed an appeal, docketed as Civil Case No. AV-1237, with the WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by
Regional Trial Court (RTC) of Argao, Cebu, Branch 26.17 us SETTING ASIDE, as we hereby set aside, the decision rendered by the RTC of
Argao, Cebu on June 23, 2004 in Civil Case No. AV-1237 and ORDERING the
Ruling of the Regional Trial Court remand of this case to the MTC of Dalaguete, Cebu for the purpose of determining
the amount of actual damages suffered by the [respondent] by reason of the
[petitioners’] refusal and failure to turn over to [respondent] the possession and
On January 12, 2004, the RTC rendered a Decision18 remanding the case to enjoyment of the land and, then, to make such award of damages to the [respondent].

the MTC for preliminary hearing to determine whether tenancy relationship exists SO ORDERED.30
between the parties.
Issues
Petitioners moved for reconsideration19 arguing that the purpose of a preliminary
hearing was served by the parties’ submission of their respective position papers and
other supporting evidence. Hence, this petition raising the following issues:

On June 23, 2004, the RTC granted the reconsideration and affirmed the MTC I.
Decision dated September 10, 2003. The fallo of the new Decision20 reads:
WHETHER X X X THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
WHEREFORE, the motion for reconsideration is GRANTED. The Decision dated DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
September 10, 2003 of the Municipal Trial Court of Dalaguete, Cebu, is hereby RULING THAT PETITIONERS-DEFENDANTS ARE NOT TENANTS OF THE
AFFIRMED. SUBJECT LAND.

IT IS SO DECIDED.21 II.

Respondent sought reconsideration22 but it was denied by the RTC in an WHETHER X X X SUCH RULING OF THE COURT OF APPEALS HAS FACTUAL
Order23 dated August 18, 2004. AND LEGAL BASIS AND IS SUPPORTED WITH SUBSTANTIAL EVIDENCE.31

Thus, respondent filed a Petition for Review24 with the CA, docketed as CA G.R. SP Petitioners’ Arguments
No. 86599.
Petitioners contend that under Section 532 of Republic Act No. 3844, otherwise known
Ruling of the Court of Appeals as the Agricultural Land Reform Code, tenancy may be constituted by agreement of
the parties either orally or in writing, expressly or impliedly. 33 In this case, there was
an implied consent to constitute a tenancy relationship as respondent and her
On August 24, 2005, the CA rendered judgment in favor of respondent. It ruled that predecessors-in-interest allowed petitioners to cultivate the land and share the
no tenancy relationship exists between the parties because petitioners failed to prove harvest with the landowners for more than 40 years.34
that respondent or her predecessors-in-interest consented to the tenancy
relationship.25 The CA likewise gave no probative value to the affidavits
Petitioners further argue that the CA erred in disregarding the affidavits executed by
their witnesses as these are sufficient to prove the existence of a tenancy
of petitioners’ witnesses as it found their statements insufficient to establish relationship.35 Petitioners claim that their witnesses had personal knowledge of the
petitioners’ status as agricultural tenants.26 If at all, the affidavits merely showed that cultivation and the sharing of harvest.36
petitioners occupied the subject land with the consent of the original owners. 27 And
since petitioners are occupying the subject land by mere tolerance, they are bound by
an implied promise to vacate the same upon demand by the respondent. 28 Failing to Respondent’s Arguments
do so, petitioners are liable to pay damages.29 Thus, the CA disposed of the case in
this manner: Respondent, on the other hand, maintains that petitioners are not agricultural tenants
because mere cultivation of an agricultural land does not make the tiller an
64

agricultural tenant.37 Respondent insists that her predecessors-in-interest merely harvest45 and that there was an agreed system of sharing between them and the
tolerated petitioners’ occupation of the subject land.38 landowners.46

Our Ruling As we have often said, mere occupation or cultivation of an agricultural land will not
ipso facto make the tiller an agricultural tenant.47 It is incumbent upon a person who
The petition lacks merit. claims to be an agricultural tenant to prove by substantial evidence all the requisites
of agricultural tenancy.48
Agricultural tenancy relationship does not exist in the instant case.
In the instant case, petitioners failed to prove consent and sharing of harvest between
the parties. Consequently, their defense of agricultural tenancy must fail. The MTC
Agricultural tenancy exists when all the following requisites are present: 1) the parties has jurisdiction over the instant case. No error can therefore be attributed to the CA in
are the landowner and the tenant or agricultural lessee; 2) the subject matter of the reversing and setting aside the dismissal of respondent’s complaint for lack of
relationship is an agricultural land; 3) there is consent between the parties to the jurisdiction. Accordingly, the remand of the case to the MTC for the determination of
relationship; 4) the purpose of the relationship is to bring about agricultural the amount of damages due respondent is proper.
production; 5) there is personal cultivation on the part of the tenant or agricultural
lessee; and 6) the harvest is shared between landowner and tenant or agricultural
lessee.39 Respondent is entitled to the fair rental value or the reasonable compensation for the
use and occupation of the subject land.
In this case, to prove that an agricultural tenancy relationship exists between the
parties, petitioners submitted as evidence the affidavits of petitioner Lucia and their We must, however, clarify that "the only damage that can be recovered [by
neighbors. In her affidavit,40 petitioner Lucia declared that she and her late husband respondent] is the fair rental value or the reasonable compensation for the use and
occupied the subject land with the consent and permission of the original owners and occupation of the leased property. The reason for this is that [in forcible entry or
that their agreement was that she and her late husband would cultivate the subject unlawful detainer cases], the only issue raised in ejectment cases is that of rightful
land, devote it to agricultural production, share the harvest with the landowners on a possession; hence, the damages which could be recovered are those which the
50-50 basis, and at the same time watch over the land. Witness Alejandro Arias [respondent] could have sustained as a mere possessor, or those caused by the loss
attested in his affidavit41 that petitioner Lucia and her husband, Serapio, have been of the use and occupation of the property, and not the damages which [she] may
cultivating the subject land since 1960; that after the demise of Serapio, petitioner have suffered but which have no direct relation to [her] loss of material possession."49
Lucia and her children continued to cultivate the subject land; and that when
respondent’s predecessors-in-interest were still alive, he would often see them and WHEREFORE, the petition is DENIED. The assailed August 24, 2005 Decision and
respondent get some of the harvest. The affidavit42 of witness Conseso Muñoz stated, the February 20, 2006 Resolution of the Court of Appeals in CA G.R. SP No. 86599
in essence, that petitioner Lucia has been in peaceful possession and cultivation of are AFFIRMED. This case is ordered REMANDED to the Municipal Trial Court of
the subject property since 1960 and that the harvest was divided into two parts, ½ for Dalaguete, Cebu, to determine the amount of damages suffered by respondent by
the landowner and ½ for petitioner Lucia. reason of the refusal and failure of petitioners to turn over the possession of the
subject land, with utmost dispatch consistent with the above disquisition.
The statements in the affidavits presented by the petitioners are not sufficient to prove
the existence of an agricultural tenancy. SO ORDERED.

As correctly found by the CA, the element of consent is lacking. 43 Except for the self- MARIANO C. DEL CASTILLO
serving affidavit of Lucia, no other evidence was submitted to show that respondent’s
predecessors-in-interest consented to a tenancy relationship with petitioners. Self-
serving statements, however, will not suffice to prove consent of the landowner;
independent evidence is necessary.44

Aside from consent, petitioners also failed to prove sharing of harvest.1avvphil The
affidavits of petitioners’ neighbors declaring that respondent and her predecessors-in-
interest received their share in the harvest are not sufficient. Petitioners should have
presented receipts or any other evidence to show that there was sharing of
65

This is a petition for review by certiorari of the Decision1 of the Court of Appeals dated
December 9, 1998 that reversed the Order of petitioner, the Department of Agrarian
Reform (petitioner DAR), by exempting the parcels of land of private respondent
Green City Estate and Development Corporation (private respondent) from agrarian
reform. Also assailed in this instant petition is the Resolution dated May 11, 1998
issued by the same court that denied the Motion for Reconsideration of petitioner
DAR.

The five parcels of land in issue has a combined area of approximately 112.0577
hectares situated at Barangay Punta, Municipality of Jala-Jala, Province of Rizal,
covered by Transfer Certificates of Title Nos. M-45856, M-45857, M-45858, M-45859
and M-45860 of the Register of Deeds of Rizal. Private respondent acquired the land
by purchase on May 26, 1994 from Marcela Borja vda. De Torres. The tax
declarations classified the properties as agricultural.

On June 16, 1994, petitioner DAR issued a Notice of Coverage of the subject parcels
of land under compulsory acquisition pursuant to Section 7, Chapter II of R.A. 6657 or
the Comprehensive Land Reform Law of 1998 (CARL).

On July 21, 1994, private respondent filed with the DAR Regional Office an
application for exemption of the land from agrarian reform, pursuant to DAR
Administrative Order No. 6, series of 19942 and DOJ Opinion No. 44, series of 1990.
Administrative Order No. 6 provides the guidelines for exemption from the
Comprehensive Agrarian Reform Program (CARP) coverage while DOJ Opinion No.
44, Series of 1990, authorizes the DAR to approve conversion of agricultural lands
covered by RA 6651 to non-agricultural uses effective June 15 1988.

In support of its application for exemption, private respondent submitted the following
documents:

1. Certified photocopies of the titles and tax declarations.


THIRD DIVISION
2. Vicinity and location plans.
G.R. No. 139592 October 5, 2000
3. Certification of the Municipal Planning and Development Coordinator of
REPUBLIC OF THE PHILIPPINES rep. by the DEPARTMENT OF AGRARIAN the Office of the Mayor of Jala-Jala.
REFORM, petitioner,
vs. 4. Resolution No. R-36, series of 1981 of the HLURB.
HON. COURT OF APPEALS and GREEN CITY ESTATE & DEVELOPMENT
CORPORATION, respondents.
5. Certification from the National Irrigation Administration.

DECISION
On October 12, 1994, the DAR Regional Director recommended a denial of the said
petition, on the ground that private respondent "failed to substantiate their (sic)
GONZAGA-REYES, J.: allegation that the properties are indeed in the municipality’s residential and forest
conservation zone and that portions of the properties are not irrigated nor irrigable".
66

On February 15, 1995, private respondent filed an Amended Petition for objected to the report of the commission mainly due to the lack of specific boundaries
Exemption/Exclusion from CARP coverage. This time, private respondent alleged that delineating the surveyed areas.
the property should be exempted since it is within the residential and forest
conservation zones of the town plan/zoning ordinance of Jala-Jala. The amended On December 9, 1998, the Court of Appeals issued its Decision that reversed the
petition for exemption showed that a portion of about 15 hectares of the land is assailed DAR orders, the dispositive portion of which reads:
irrigated riceland which private respondent offered to sell to the farmer beneficiaries
or to the DAR. In support of its amended petition, private respondent submitted the
following additional documents: "WHEREFORE, the Orders of the respondent Secretary dated October 19, 1995 and
November 15, 1995 are hereby REVERSED, and judgement is hereby rendered
declaring those portions of the land of the petitioner which are mountainous and
1. Certification letter from the HLURB that the specific properties are within residential, as found by the Courts (sic) commissioners, to be exempt from the
the residential and forest conservation zone. Comprehensive Agrarian Reform Program, subject to their delineation. The records of
this case are hereby ordered remanded to the respondent Secretary for further
2. Certification from the HLURB that the town plan/zoning ordinance of Jala- proceedings in the determination of the boundaries of the said areas." 3
Jala was approved on December 2, 1981 by the Human Settlements
Commission. Hence this petition for review wherein petitioner DAR seeks the reversal of the
foregoing decision on the ground that the honorable Court of Appeals erred:
3. Undertaking that the landowner is ready and willing to pay disturbance
compensation to the tenants for such amount as may be agreed upon or 1. WHEN IT RULED THAT THERE WAS NO DEFINITE CLASSIFICATION
directed by the DAR. OF THE PROPERTIES INVOLVED WHEN, PER THE CORRESPONDING
TAX DECLARATIONS, THEY ARE GENERALLY CLASSIFIED AS
4. Vicinity plan. AGRICULTURAL.

5. Amended survey plan which indicates the irrigated riceland that is now 2. WHEN IT RULED THAT THE PHYSICAL FEATURES OF THE LAND AS
excluded from the application. OF 1980 OR BEFORE AS APPEARING IN TABLE 3-3 OF THE ZONING
ORDINANCE IS THE PRESENT CLASSIFICATION OF THE
6. Certification of the Jala-Jala Municipal Planning and Development LANDHOLDINGS INVOLVED; and
Coordinator to the effect that the properties covered are within the residential
and forest conservation areas pursuant to the zoning ordinance of Jala-Jala. 3. WHEN IT MADE A RULING ON HOW SUBJECT LANDHOLDING BE
CLASSIFIED (WHETHER COVERED BY AGRARIAN REFORM FOR
On October 19, 1995, the DAR Secretary issued an Order denying the application for BEING AGRICULTURAL LAND OR NOT) AND DISPOSED OF SOLELY
exemption of private respondent, on the grounds that the land use plan of Jala-Jala, ON THE BASIS OF THE PHYSICAL CONDITION OF THE LAND
which differs from its land use map, intends to develop 73% of Barangay Punta into IRRESPECTIVE OF THE LEGAL ISSUE RAISED ON THEIR LEGAL
an agricultural zone; that the certification issued by the Housing and Land Use CLASSIFICATION, A FUNCTION THAT IS VESTED IN CONGRESS.4
Regulatory Board (HLURB) is not definite and specific; and that the certification
issued by the National Irrigation Authority (NIA) that the area is not irrigated nor The petition has no merit.
programmed for irrigation, is not conclusive on the DAR, since big areas in the
municipality are recipients of JICA-funded Integrated Jala-Jala Rural Development Republic Act No. 6657 otherwise known as the Comprehensive Agrarian Reform Law
Projects. The motion for reconsideration filed by private respondent was likewise (CARL) of 1998 covers all public and private agricultural lands. The same law defines
denied by the DAR Secretary. agricultural as "land devoted to agricultural activity as defined in this Act and not
classified as mineral, forest, residential, commercial or industrial land". 5
Private respondent then appealed to the Court of Appeals. During the course of the
appeal, said court created a commission composed of three (3) members tasked to Private respondent sought exemption from the coverage of CARL on the ground that
conduct an ocular inspection and survey of the subject parcels of land and to submit a its five parcels of land are not wholly agricultural. The land use map of the
report on the result of such inspection and survey. To verify the report of the municipality, certified by the Office of the Municipal Planning and Development
commission, the DAR constituted its own team to inspect and report on the property Coordinator (MPDC) of Jala-Jala and the report of the commission constituted by the
in question. The verification report of the DAR, duly filed with the Court of Appeals,
67

Court of Appeals established that the properties lie mostly within the residential and The foregoing arguments are untenable. We are in full agreement with respondent
forest conservation zone. Court when it rationalized that the land use map is the more appropriate document to
consider, thus:
Petitioner DAR maintains that the subject properties have already been classified as
agricultural based on the tax declarations.6 The Office of the Solicitor General (OSG) "The petitioner (herein private respondent) presented a development plan of the
and petitioner DAR are one in contending that the classification of lands once Municipality of Jala-Jala, which was approved by the Housing and Land Use
determined by law may not be varied or altered by the results of a mere ocular or Regulatory Board (HLURB) on December 2, 1981. It also presented certifications
aerial inspection.7 from the HLURB and the Municipal Planning and Development Coordinator of Jala-
Jala that the subject properties fall within the Residential and Forest Conservation
We are unable to sustain petitioner’s contention. There is no law or jurisprudence that zones of the municipality. Extant on the record is a color-coded land use map of Jala-
holds that the land classification embodied in the tax declarations is conclusive and Jala, showing that the petitioner’s land falls mostly within the Residential and Forest
final nor would proscribe any further inquiry. Furthermore, the tax declarations are Conservation zones. This notwithstanding, the respondent Secretary of Agrarian
clearly not the sole basis of the classification of a land. In fact, DAR Administrative Reform denied the petitioner’s application on the ground that the town plan of the
Order No. 6 lists other documents, aside from tax declarations, that must be municipality, particularly Table 4-4 thereof, shows that Barangay Punta is intended to
submitted when applying for exemption from CARP.8 In Halili vs. Court of Appeals9 , remain and to become a progressive agricultural community in view of the abundance
we sustained the trial court when it ruled that the classification made by the Land of fertile agricultural areas in the barangay, and that there is a discrepancy between
Regulatory Board of the land in question outweighed the classification stated in the the land use mapwhich identifies a huge forest conservation zone and the land
tax declaration. The classification of the Board in said case was more recent than that use plan which has no area classified as forest conservation.1âwphi1
of the tax declaration and was based on the present condition of the property and the
community thereat.10 However, a closer look at the development plan for the municipality of Jala-Jala
shows that Table 4-4 does not represent the present classification of land in that
In this case, the Court of Appeals was constrained to resort to an ocular inspection of municipality, but the proposed land use to be achieved. The existing land use as of
said properties through the commission it created considering that the opinion of 1980 is shown by Table 3-3, wherein Barangay Punta is shown to have a forest area
petitioner DAR conflicted with the land use map submitted in evidence by private of 35 hectares and open grassland (which was formerly forested area) of 56 hectares.
respondent. Respondent court also noted that even from the beginning the properties The land use map is consistent with this."16
of private respondent had no definite delineation and classification. 11 Hence, the
survey of the properties through the court appointed commissioners was the judicious Moreover, the commissioner’s report on the actual condition of the properties
and equitable solution to finally resolve the issue of land classification and confirms the fact that the properties are not wholly agricultural. In essence, the report
delineation. of the commission showed that the land of private respondent consists of a
mountainous area with an average 28 degree slope containing 66.5 hectares; a level,
The OSG stresses that to be exempt from CARP under DOJ Opinion No. 44, the land unirrigated area of 34 hectares of which 5 to 6 hectares are planted to palay; and a
must have been classified as industrial/residential before June 15, 1988. 12 Based on residential area of 8 hectares.17 The finding that 66.5 hectares of the 112.0577
this premise, the OSG points out that no such classification was presented except the hectares of land of private respondent have an average slope of 28 degrees provides
municipality’s alleged land use map in 1980 showing that subject parcels of land fall another cogent reason to exempt these portions of the properties from the CARL.
within the municipality’s forest conservation zone.13 The OSG further argues that Section 10 of the CARL is clear on this point when it provides that "all lands with
assuming that a change in the use of the subject properties in 1980 may justify their eighteen percent (18%) slope and over, except those already developed shall be
exemption from CARP under DOJ Opinion No. 44, such land use of 1980 was, exempt from the coverage of this Act".
nevertheless, repealed/amended when the HLURB approved the municipality’s
Comprehensive Development Plan for Barangay Punta for the years 1980 to 2000 in Petitioner DAR and the OSG contest the finding of the Court of Appeals that the
its Resolution No. 33, series of 1981.14 The plan for Barangay Punta, where the subject parcels of land have a mountainous slope on the ground that this conclusion
parcels of land in issue are located, allegedly envision the development of the was allegedly arrived at in a manner not in accord with established surveying
barangay into a progressive agricultural community with the limited allocation of only procedures.18 They also bewail the consideration given by the Court of Appeals to the
51 hectares for residential use and none for commercial and forest conservation zone "slope" issue since this matter was allegedly never raised before the DAR and the
use.15 Court of Appeals.19 Petitioner DAR and the OSG thus claim that laches had already
set in.20
68

As pointed out earlier, the crux of the controversy is whether the subject parcels of
land in issue are exempt from the coverage of the CARL. The determination of the
classification and physical condition of the lands is therefore material in the EN BANC
disposition of this case, for which purpose the Court of Appeals constituted the
commission to inspect and survey said properties. Petitioner DAR did not object to
the creation of a team of commissioners21 when it very well knew that the survey and
ocular inspection would eventually involve the determination of the slope of the
subject parcels of land. It is the protestation of petitioner that comes at a belated hour. G.R. No. 103302 August 12, 1993
The team of commissioners appointed by respondent court was composed persons
who were mutually acceptable to the parties.22 Thus, in the absence of any irregularity NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS
in the survey and inspection of the subject properties, and none is alleged, the report CORP., petitioners,
of the commissioners deserves full faith and credit and we find no reversible error in vs.
the reliance by the appellate court upon said report. DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR.
WILFREDO LEANO, DAR REGION IV, respondents.
WHEREFORE, the petition is hereby DENIED. The challenged Decision is
AFFIRMED. Lino M. Patajo for petitioners.

SO ORDERED. The Solicitor General for respondents.

Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

BELLOSILLO, J.:

Are lands already classified for residential, commercial or industrial use, as approved
by the Housing and Land Use Regulatory Board and its precursor agencies 1 prior to
15 June 1988,2 covered by R.A. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988? This is the pivotal issue in this petition
for certiorari assailing the Notice of Coverage3 of the Department of Agrarian Reform
over parcels of land already reserved as townsite areas before the enactment of the
law.

Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3)
contiguous parcels of land located in Banaba, Antipolo, Rizal, with areas of 120.9793
hectares, 1.3205 hectares and 2.7080 hectares, or a total of 125.0078 hectares, and
embraced in Transfer Certificate of Title No. 31527 of the Register of Deeds of the
Province of Rizal.

On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of
land located in the Municipalities of Antipolo, San Mateo and Montalban as townsite
areas to absorb the population overspill in the metropolis which were designated as
the Lungsod Silangan Townsite. The NATALIA properties are situated within the
areas proclaimed as townsite reservation.

Since private landowners were allowed to develop their properties into low-cost
housing subdivisions within the reservation, petitioner Estate Developers and
Investors Corporation (EDIC, for brevity), as developer of NATALIA properties,
69

applied for and was granted preliminary approval and locational clearances by the Decree," in that no application for conversion of the NATALIA lands from agricultural
Human Settlements Regulatory Commission. The necessary permit for Phase I of the residential was ever filed with the DAR. In other words, there was no valid conversion.
subdivision project, which consisted of 13.2371 hectares, was issued sometime in Moreover, public respondents allege that the instant petition was prematurely filed
1982;4 for Phase II, with an area of 80,000 hectares, on 13 October 1983; 5 and for because the case instituted by SAMBA against petitioners before the DAR Regional
Phase III, which consisted of the remaining 31.7707 hectares, on 25 April Adjudicator has not yet terminated. Respondents conclude, as a consequence, that
1986.6 Petitioner were likewise issued development permits 7 after complying with the petitioners failed to fully exhaust administrative remedies available to them before
requirements. Thus the NATALIA properties later became the Antipolo Hills coming to court.
Subdivision.
The petition is impressed with merit. A cursory reading of the Preliminary Approval
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian and Locational Clearances as well as the Development Permits granted petitioners
Reform Law of 1988" (CARL, for brevity), went into effect. Conformably therewith, for Phases I, II and III of the Antipolo Hills Subdivision reveals that contrary to the
respondent Department of Agrarian Reform (DAR, for brevity), through its Municipal claim of public respondents, petitioners NATALIA and EDIC did in fact comply with all
Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage on the the requirements of law.
undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly
90.3307 hectares. NATALIA immediately registered its objection to the notice of Petitioners first secured favorable recommendations from the Lungsod Silangan
Coverage. Development Corporation, the agency tasked to oversee the implementation of the
development of the townsite reservation, before applying for the necessary permits
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV from the Human Settlements Regulatory
Office and twice wrote him requesting the cancellation of the Notice of Coverage. Commission. 10 And, in all permits granted to petitioners, the Commission
stated invariably therein that the applications were in "conformance" 11 or
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, "conformity" 12 or "conforming" 13 with the implementing Standards, Rules and
Inc. (SAMBA, for the brevity), filed a complaint against NATALIA and EDIC before the Regulations of P.D. 957. Hence, the argument of public respondents that not all of the
DAR Regional Adjudicator to restrain petitioners from developing areas under requirements were complied with cannot be sustained.
cultivation by SAMBA members.8 The Regional Adjudicator temporarily restrained
petitioners from proceeding with the development of the subdivision. Petitioners then As a matter of fact, there was even no need for petitioners to secure a clearance or
moved to dismiss the complaint; it was denied. Instead, the Regional Adjudicator prior approval from DAR. The NATALIA properties were within the areas set aside for
issued on 5 March 1991 a Writ of Preliminary Injunction. the Lungsod Silangan Reservation. Since Presidential Proclamation No. 1637 created
the townsite reservation for the purpose of providing additional housing to the
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board burgeoning population of Metro Manila, it in effect converted for residential use what
(DARAB); however, on 16 December 1991 the DARAB merely remanded the case to were erstwhile agricultural lands provided all requisites were met. And, in the case at
the Regional Adjudicator for further proceedings.9 bar, there was compliance with all relevant rules and requirements. Even in their
applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its requirements prescribed by P.D. 957.
request to set aside the Notice of Coverage. Neither respondent Secretary nor
respondent Director took action on the protest-letters, thus compelling petitioners to
institute this proceeding more than a year thereafter. The implementing Standards, Rules and Regulations of P.D. 957 applied to all
subdivisions and condominiums in general. On the other hand, Presidential
Proclamation No. 1637 referred only to the Lungsod Silangan Reservation, which
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for makes it a special law. It is a basic tenet in statutory construction that between a
including undedeveloped portions of the Antipolo Hills Subdivision within the general law and a special law, the latter prevails. 14
coverage of the CARL. They argue that NATALIA properties already ceased to be
agricultural lands when they were included in the areas reserved by presidential fiat
for the townsite reservation. Interestingly, the Office of the Solicitor General does not contest the conversion of
portions of the Antipolo Hills Subdivision which have already been developed. 15 Of
course, this is contrary to its earlier position that there was no valid conversion. The
Public respondents through the Office of the Solicitor General dispute this contention. applications for the developed and undeveloped portions of subject subdivision were
They maintain that the permits granted petitioners were not valid and binding because similarly situated. Consequently, both did not need prior DAR approval.
they did not comply with the implementing Standards, Rules and Regulations of P.D.
957, otherwise known as "The Subdivision and Condominium Buyers Protective
70

We now determine whether such lands are covered by the CARL. Section 4 of R.A. Anent the argument that there was failure to exhaust administrative remedies in the
6657 provides that the CARL shall "cover, regardless of tenurial arrangement and instant petition, suffice it to say that the issues raised in the case filed by SAMBA
commodity produced, all public and private agricultural lands." As to what constitutes members differ from those of petitioners. The former involve possession; the latter,
"agricultural land," it is referred to as "land devoted to agricultural activity as defined in the propriety of including under the operation of CARL lands already converted for
this Act and not classified as mineral, forest, residential, commercial or industrial residential use prior to its effectivity.
land." 16 The deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" are only those lands which are "arable and suitable agricultural Besides, petitioners were not supposed to wait until public respondents acted on their
lands" and "do not include commercial, industrial and residential lands." 17 letter-protests, this after sitting it out for almost a year. Given the official indifference,
which under the circumstances could have continued forever, petitioners had to act to
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills assert and protect their interests. 20
Subdivision cannot in any language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be agricultural lands upon approval In fine, we rule for petitioners and hold that public respondents gravely abused their
of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in discretion in issuing the assailed Notice of Coverage of 22 November 1990 by of
question continued to be developed as a low-cost housing subdivision, albeit at a lands over which they no longer have jurisdiction.
snail's pace. This can readily be gleaned from the fact that SAMBA members even
instituted an action to restrain petitioners from continuing with such development. The
enormity of the resources needed for developing a subdivision may have delayed its WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22
completion but this does not detract from the fact that these lands are still residential November 1990 by virtue of which undeveloped portions of the Antipolo Hills
lands and outside the ambit of the CARL. Subdivision were placed under CARL coverage is hereby SET ASIDE.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. SO ORDERED.
These include lands previously converted to non-agricultural uses prior to the
effectivity of CARL by government agencies other than respondent DAR. In its
Revised Rules and Regulations Governing Conversion of Private Agricultural Lands
to Non-Agricultural Uses, 18 DAR itself defined "agricultural land" thus —

. . . Agricultural lands refers to those devoted to agricultural activity


as defined in R.A. 6657 and not classified as mineral or forest by
the Department of Environment and Natural Resources (DENR)
and its predecessor agencies, and not classified in town plans and
zoning ordinances as approved by the Housing and Land Use
Regulatory Board (HLURB) and its preceding competent authorities
prior to 15 June 1988 for residential, commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions
of the Antipolo Hills Subdivision within the coverage of CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of


Agrarian Reform, noted in an Opinion 19 that lands covered by Presidential
Proclamation No. 1637, inter alia, of which the NATALIA lands are part, having been
reserved for townsite purposes "to be developed as human settlements by the proper
land and housing agency," are "not deemed 'agricultural lands' within the meaning
and intent of Section 3 (c) of R.A. No. 6657. " Not being deemed "agricultural lands,"
they are outside the coverage of CARL.
71

expanded into the Bukidnon National Agricultural High School and was transferred to
its new site in Managok near Malaybalay, the provincial capital of Bukidnon.

In the early 1960's, it was converted into a college with campus at Musuan, until it
became what is now known as the CMU, but still primarily an agricultural university.
From its beginning, the school was the answer to the crying need for training people
in order to develop the agricultural potential of the island of Mindanao. Those who
EN BANC planned and established the school had a vision as to the future development of that
part of the Philippines. On January 16, 1958 the President of the Republic of the
Philippines, the late Carlos P. Garcia, "upon the recommendation of the Secretary of
Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of
G.R. No. 100091 October 22, 1992 Commonwealth Act No. 141, as amended", issued Proclamation No. 476,
withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College, a site which would be the future campus of what is now the CMU. A total
CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR. land area comprising 3,080 hectares was surveyed and registered and titled in the
LEONARDO A. CHUA, petitioner, name of the petitioner under OCT Nos. 160, 161 and 162. 1
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE
COURT OF APPEALS and ALVIN OBRIQUE, REPRESENTING BUKIDNON FREE In the course of the cadastral hearing of the school's petition for registration of the
FARMERS AGRICULTURAL LABORERS ORGANIZATION aforementioned grant of agricultural land, several tribes belonging to cultural
(BUFFALO), respondents. communities, opposed the petition claiming ownership of certain ancestral lands
forming part of the tribal reservations. Some of the claims were granted so that what
was titled to the present petitioner school was reduced from 3,401 hectares to 3,080
hectares.

CAMPOS, JR., J.: In the early 1960's, the student population of the school was less than 3,000. By
1988, the student population had expanded to some 13,000 students, so that the
This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to school community has an academic population (student, faculty and non-academic
nullify the proceedings and decision of the Department of Agrarian Reform staff) of almost 15,000. To cope with the increase in its enrollment, it has expanded
Adjudication Board (DARAB for brevity) dated September 4, 1989 and to set aside and improved its educational facilities partly from government appropriation and partly
the decision the decision * of the Court of Appeals dated August 20, 1990, affirming by self-help measures.
the decision of the DARAB which ordered the segregation of 400 hectares of suitable,
compact and contiguous portions of the Central Mindanao University (CMU for True to the concept of a land grant college, the school embarked on self-help
brevity) land and their inclusion in the Comprehensive Agrarian Reform Program measures to carry out its educational objectives, train its students, and maintain
(CARP for brevity) for distribution to qualified beneficiaries, on the ground of lack of various activities which the government appropriation could not adequately support or
jurisdiction. sustain. In 1984, the CMU approved Resolution No. 160, adopting a livelihood
program called "Kilusang Sariling Sikap Program" under which the land resources of
This case originated in a complaint filed by complainants calling themselves as the the University were leased to its faculty and employees. This arrangement was
Bukidnon Free Farmers and Agricultural Laborers Organization (BUFFALO for covered by a written contract. Under this program the faculty and staff combine
brevity) under the leadership of Alvin Obrique and Luis Hermoso against the CMU, themselves to groups of five members each, and the CMU provided technical know-
before the Department of Agrarian Reform for Declaration of Status as Tenants, how, practical training and all kinds of assistance, to enable each group to cultivate 4
under the CARP. to 5 hectares of land for the lowland rice project. Each group pays the CMU a service
fee and also a land use participant's fee. The contract prohibits participants and their
hired workers to establish houses or live in the project area and to use the cultivated
From the records, the following facts are evident. The petitioner, the CMU, is an
land as a collateral for any kind of loan. It was expressly stipulated that no landlord-
agricultural educational institution owned and run by the state located in the town of
tenant relationship existed between the CMU and the faculty and/or employees. This
Musuan, Bukidnon province. It started as a farm school at Marilang, Bukidnon in early
particular program was conceived as a multi-disciplinary applied research extension
1910, in response to the public demand for an agricultural school in Mindanao. It
and productivity program to utilize available land, train people in modern agricultural
technology and at the same time give the faculty and staff opportunities within the
72

confines of the CMU reservation to earn additional income to augment their salaries. employees. It was also expressly provided that no tenant-landlord relationship would
The location of the CMU at Musuan, Bukidnon, which is quite a distance from the exist as a result of the Agreement.
nearest town, was the proper setting for the adoption of such a program. Among the
participants in this program were Alvin Obrique, Felix Guinanao, Joven Caballero, The one-year contracts expired on June 30, 1988. Some contracts were renewed.
Nestor Pulao, Danilo Vasquez, Aronio Pelayo and other complainants. Obrique was a Those whose contracts were not renewed were served with notices to vacate.
Physics Instructor at the CMU while the others were employees in the lowland rice
project. The other complainants who were not members of the faculty or non-
academic staff CMU, were hired workers or laborers of the participants in this The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane
program. When petitioner Dr. Leonardo Chua became President of the CMU in July project, the loss of jobs due to termination or separation from the service and the
1986, he discontinued the agri-business project for the production of rice, corn and alleged harassment by school authorities, all contributed to, and precipitated the filing
sugar cane known as Agri-Business Management and Training Project, due to losses of the complaint.
incurred while carrying on the said project. Some CMU personnel, among whom were
the complainants, were laid-off when this project was discontinued. As Assistant On the basis of the above facts, the DARAB found that the private respondents were
Director of this agri-business project, Obrique was found guilty of mishandling the not tenants and cannot therefore be beneficiaries under the CARP. At the same time,
CMU funds and was separated from service by virtue of Executive Order No. 17, the the DARAB ordered the segregation of 400 hectares of suitable, compact and
re-organization law of the CMU. contiguous portions of the CMU land and their inclusion in the CARP for distribution to
qualified beneficiaries.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help
project called CMU-Income Enhancement Program (CMU-IEP) to develop unutilized The petitioner CMU, in seeking a review of the decisions of the respondents DARAB
land resources, mobilize and promote the spirit of self-reliance, provide socio- and the Court of Appeals, raised the following issues:
economic and technical training in actual field project implementation and augment
the income of the faculty and the staff. 1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for
Declaration of Status of Tenants and coverage of land under the CARP.
Under the terms of a 3-party Memorandum of Agreement 2 among the CMU, the
CMU-Integrated Development Foundation (CMU-IDF) and groups or "seldas" of 5 2.) Whether or not respondent Court of Appeals committed serious errors and grave
CMU employees, the CMU would provide the use of 4 to 5 hectares of land to a selda abuse of discretion amounting to lack of jurisdiction in dismissing the Petition for
for one (1) calendar year. The CMU-IDF would provide researchers and specialists to Review on Certiorari and affirming the decision of DARAB.
assist in the preparation of project proposals and to monitor and analyze project
implementation. The selda in turn would pay to the CMU P100 as service fee and
P1,000 per hectare as participant's land rental fee. In addition, 400 kilograms of the In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants
produce per year would be turned over or donated to the CMU-IDF. The participants Obrique, et al. claimed that they are tenants of the CMU and/or landless peasants
agreed not to allow their hired laborers or member of their family to establish any claiming/occupying a part or portion of the CMU situated at Sinalayan, Valencia,
house or live within vicinity of the project area and not to use the allocated lot as Bukidnon and Musuan, Bukidnon, consisting of about 1,200 hectares. We agree with
collateral for a loan. It was expressly provided that no tenant-landlord relationship the DARAB's finding that Obrique, et. al. are not tenants. Under the terms of the
would exist as a result of the Agreement. written agreement signed by Obrique, et. al., pursuant to the livelihood program called
"Kilusang Sariling Sikap Program", it was expressly stipulated that no landlord-tenant
relationship existed between the CMU and the faculty and staff (participants in the
Initially, participation in the CMU-IEP was extended only to workers and staff project). The CMU did not receive any share from the harvest/fruits of the land tilled
members who were still employed with the CMU and was not made available to by the participants. What the CMU collected was a nominal service fee and land use
former workers or employees. In the middle of 1987, to cushion the impact of the participant's fee in consideration of all the kinds of assistance given to the participants
discontinuance of the rice, corn and sugar cane project on the lives of its former by the CMU. Again, the agreement signed by the participants under the CMU-IEP
workers, the CMU allowed them to participate in the CMU-IEP as special participants. clearly stipulated that no landlord-tenant relationship existed, and that the participants
are not share croppers nor lessees, and the CMU did not share in the produce of the
Under the terms of a contract called Addendum To Existing Memorandum of participants' labor.
Agreement Concerning Participation To the CMU-Income Enhancement Program, 3 a
former employee would be grouped with an existing selda of his choice and provided In the same paragraph of their complaint, complainants claim that they are landless
one (1) hectare for a lowland rice project for one (1) calendar year. He would pay the peasants. This allegation requires proof and should not be accepted as factually true.
land rental participant's fee of P1,000.00 per hectare but on a charge-to-crop basis. Obrique is not a landless peasant. The facts showed he was Physics Instructor at
He would also be subject to the same prohibitions as those imposed on the CMU
73

CMU holding a very responsible position was separated from the service on account The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive
of certain irregularities he committed while Assistant Director of the Agri-Business Agrarian Reform Law of 1988, are as follows:
Project of cultivating lowland rice. Others may, at the moment, own no land in
Bukidnon but they may not necessarily be so destitute in their places of origin. No Sec. 4. SCOPE. — The Comprehensive Agrarian Reform Law of
proof whatsoever appears in the record to show that they are landless peasants. 1988 shall cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural lands as
The evidence on record establish without doubt that the complainants were originally provided in Proclamation No. 131 and Executive Order No. 229
authorized or given permission to occupy certain areas of the CMU property for a including other lands of the public domain suitable for agriculture.
definite purpose — to carry out certain university projects as part of the CMU's
program of activities pursuant to its avowed purpose of giving training and instruction More specifically, the following lands are covered by the
in agricultural and other related technologies, using the land and other resources of Comprehensive Agrarian Reform Program:
the institution as a laboratory for these projects. Their entry into the land of the CMU
was with the permission and written consent of the owner, the CMU, for a limited
period and for a specific purpose. After the expiration of their privilege to occupy and (a) All alienable and disposable lands of the public domain devoted
cultivate the land of the CMU, their continued stay was unauthorized and their to or suitable for agriculture. No reclassification of forest of mineral
settlement on the CMU's land was without legal authority. A person entering upon lands to agricultural lands shall be undertaken after the approval of
lands of another, not claiming in good faith the right to do so by virtue of any title of this Act until Congress, taking into account ecological,
his own, or by virtue of some agreement with the owner or with one whom he believes developmental and equity considerations, shall have determined by
holds title to the land, is a squatter. 4 Squatters cannot enter the land of another law, the specific limits of the public domain;
surreptitiously or by stealth, and under the umbrella of the CARP, claim rights to said
property as landless peasants. Under Section 73 of R.A. 6657, persons guilty of (b) All lands of the public domain in excess of the specific limits ad
committing prohibited acts of forcible entry or illegal detainer do not qualify as determined by Congress in the preceding paragraph;
beneficiaries and may not avail themselves of the rights and benefits of agrarian
reform. Any such person who knowingly and wilfully violates the above provision of (c) All other lands owned by the Government devoted to or suitable
the Act shall be punished with imprisonment or fine at the discretion of the Court. for agriculture; and

In view of the above, the private respondents, not being tenants nor proven to be (d) All private lands devoted to or suitable for agriculture regardless
landless peasants, cannot qualify as beneficiaries under the CARP. of the agricultural products raised or that can be raised thereon.

The questioned decision of the Adjudication Board, affirmed in toto by the Court of Sec. 10 EXEMPTIONS AND EXCLUSIONS. — Lands actually,
Appeals, segregating 400 hectares from the CMU land is primarily based on the directly and exclusively used and found to be necessary for parks,
alleged fact that the land subject hereof is "not directly, actually and exclusively used wildlife, forest reserves, reforestration, fish sanctuaries and
for school sites, because the same was leased to Philippine Packing Corporation breeding grounds, watersheds and mangroves, national
(now Del Monte Philippines)". defense, school sites and campuses including experimental farm
stations operated by public or private schools for educational
In support of this view, the Board held that the "respondent University failed to show purposes, seeds and seedlings research and pilot production
that it is using actually, really, truly and in fact, the questioned area to the exclusion of centers, church sites and convents appurtenant thereto, mosque
others, nor did it show that the same is directly used without any intervening agency sites and Islamic centers appurtenant thereto, communal burial
or person", 5 and "there is no definite and concrete showing that the use of said lands grounds and cemeteries, penal colonies and penal farms actually
are essentially indispensable for educational purposes". 6 The reliance by the worked by the inmates, government and private research and
respondents Board and Appellate Tribunal on the technical or literal definition from quarantine centers and all lands with eighteen percent (18%) slope
Moreno's Philippine Law Dictionary and Black's Law Dictionary, may give the ordinary and over, except those already developed shall be exempt from the
reader a classroom meaning of the phrase "is actually directly and exclusively", but in coverage of this Act. (Emphasis supplied).
so doing they missed the true meaning of Section 10, R.A. 6657, as to what lands are
exempted or excluded from the coverage of the CARP. The construction given by the DARAB to Section 10 restricts the land area of the
CMU to its present needs or to a land area presently, actively exploited and utilized
by the university in carrying out its present educational program with its present
74

student population and academic facility — overlooking the very significant factor of The first land use plan of the CARP was prepared in 1975 and since then it has
growth of the university in the years to come. By the nature of the CMU, which is a undergone several revisions in line with changing economic conditions, national
school established to promote agriculture and industry, the need for a vast tract of economic policies and financial limitations and availability of resources. The CMU,
agricultural land and for future programs of expansion is obvious. At the outset, the through Resolution No. 160 S. 1984, pursuant to its development plan, adopted a
CMU was conceived in the same manner as land grant colleges in America, a type of multi-disciplinary applied research extension and productivity program called the
educational institution which blazed the trail for the development of vast tracts of "Kilusang Sariling Sikap Project" (CMU-KSSP). The objectives 9 of this program
unexplored and undeveloped agricultural lands in the Mid-West. What we now know were:
as Michigan State University, Penn State University and Illinois State University,
started as small land grant colleges, with meager funding to support their ever 1. Provide researches who shall assist in (a) preparation of
increasing educational programs. They were given extensive tracts of agricultural and proposal; (b) monitor project implementation; and (c) collect and
forest lands to be developed to support their numerous expanding activities in the analyze all data and information relevant to the processes and
fields of agricultural technology and scientific research. Funds for the support of the results of project implementation;
educational programs of land grant colleges came from government appropriation,
tuition and other student fees, private endowments and gifts, and earnings from
miscellaneous sources. 7 It was in this same spirit that President Garcia issued 2. Provide the use of land within the University reservation for the
Proclamation No. 476, withdrawing from sale or settlement and reserving for the purpose of establishing a lowland rice project for the party of the
Mindanao Agricultural College (forerunner of the CMU) a land reservation of 3,080 Second Part for a period of one calendar year subject to
hectares as its future campus. It was set up in Bukidnon, in the hinterlands of discretionary renewal by the Party of the First Part;
Mindanao, in order that it can have enough resources and wide open spaces to grow
as an agricultural educational institution, to develop and train future farmers of 3. Provide practical training to the Party of the Second Part on the
Mindanao and help attract settlers to that part of the country. management and operation of their lowland project upon request of
Party of the Second Part; and
In line with its avowed purpose as an agricultural and technical school, the University
adopted a land utilization program to develop and exploit its 3080-hectare land 4. Provide technical assistance in the form of relevant livelihood
reservation as follows: 8 project specialists who shall extend expertise on scientific methods
of crop production upon request by Party of the Second Part.
No. of Hectares Percentage
In return for the technical assistance extended by the CMU, the participants in a
a. Livestock and Pasture 1,016.40 33 project pay a nominal amount as service fee. The self-reliance program was adjunct
to the CMU's lowland rice project.
b. Upland Crops 616 20
The portion of the CMU land leased to the Philippine Packing Corporation (now Del
Monte Phils., Inc.) was leased long before the CARP was passed. The agreement
c. Campus and Residential sites 462 15 with the Philippine Packing Corporation was not a lease but a Management and
Development Agreement, a joint undertaking where use by the Philippine Packing
d. Irrigated rice 400.40 13 Corporation of the land was part of the CMU research program, with the direct
participation of faculty and students. Said contracts with the Philippine Packing
e. Watershed and forest reservation 308 10 Corporation and others of a similar nature (like MM-Agraplex) were made prior to the
enactment of R.A. 6657 and were directly connected to the purpose and objectives of
the CMU as an educational institution. As soon as the objectives of the agreement for
f. Fruit and Trees Crops 154 5 the joint use of the CMU land were achieved as of June 1988, the CMU adopted a
blue print for the exclusive use and utilization of said areas to carry out its own
g. Agricultural research and agricultural experiments.
Experimental stations 123.20 4
As to the determination of when and what lands are found to be necessary for use by
3,080.00 100% the CMU, the school is in the best position to resolve and answer the question and
pass upon the problem of its needs in relation to its avowed objectives for which the
land was given to it by the State. Neither the DARAB nor the Court of Appeals has the
75

right to substitute its judgment or discretion on this matter, unless the evidentiary facts Sec. 13. –– AGRARIAN REFORM ADJUDICATION BOARD —
are so manifest as to show that the CMU has no real for the land. There is hereby created an Agrarian Reform Adjudication Board
under the office of the Secretary. . . . The Board shall assume the
It is our opinion that the 400 hectares ordered segregated by the DARAB and powers and functions with respect to adjudication of agrarian
affirmed by the Court of Appeals in its Decision dated August 20, 1990, is not covered reform cases under Executive Order 229 and this Executive Order .
by the CARP because: ..

(1) It is not alienable and disposable land of the public domain; Sec. 17. –– QUASI JUDICIAL POWERS OF THE DAR. — The
DAR is hereby vested with quasi-judicial powers to determine and
adjudicate agrarian reform matters and shall have exclusive original
(2) The CMU land reservation is not in excess of specific limits as jurisdiction over all matters including implementation of Agrarian
determined by Congress; Reform.

(3) It is private land registered and titled in the name of its lawful Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as
owner, the CMU; follows:

(4) It is exempt from coverage under Section 10 of R.A. 6657 The DAR is hereby vested with primary jurisdiction to determine
because the lands are actually, directly and exclusively used and adjudicate agrarian reform matters and shall have original
and found to be necessary for school site and campus, including jurisdiction over all matters involving the implementation of agrarian
experimental farm stations for educational purposes, and for reform. . . .
establishing seed and seedling research and pilot production
centers. (Emphasis supplied).
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50,
R.A. 6657. There is no doubt that the DARAB has jurisdiction to try and
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of decide any agrarian dispute in the implementation of the CARP. An agrarian
the DARAB is limited only to matters involving the implementation of the CARP. More dispute is defined by the same law as any controversy relating to tenurial
specifically, it is restricted to agrarian cases and controversies involving lands falling rights whether leasehold, tenancy stewardship or otherwise over lands
within the coverage of the aforementioned program. It does not include those which devoted to
are actually, directly and exclusively used and found to be necessary for, among such agriculture. 10
purposes, school sites and campuses for setting up experimental farm stations,
research and pilot production centers, etc.
In the case at bar, the DARAB found that the complainants are not share tenants or
lease holders of the CMU, yet it ordered the "segregation of a suitable compact and
Consequently, the DARAB has no power to try, hear and adjudicate the case pending contiguous area of Four Hundred hectares, more or less", from the CMU land
before it involving a portion of the CMU's titled school site, as the portion of the CMU reservation, and directed the DAR Regional Director to implement its order of
land reservation ordered segregated is actually, directly and exclusively used and segregation. Having found that the complainants in this agrarian dispute for
found by the school to be necessary for its purposes. The CMU has constantly raised Declaration of Tenancy Status are not entitled to claim as beneficiaries of the CARP
the issue of the DARAB's lack of jurisdiction and has questioned the respondent's because they are not share tenants or leaseholders, its order for the segregation of
authority to hear, try and adjudicate the case at bar. Despite the law and the evidence 400 hectares of the CMU land was without legal authority. w do not believe that the
on record tending to establish that the fact that the DARAB had no jurisdiction, it quasi-judicial function of the DARAB carries with it greater authority than ordinary
made the adjudication now subject of review. courts to make an award beyond what was demanded by the
complainants/petitioners, even in an agrarian dispute. Where the quasi-judicial body
Whether the DARAB has the authority to order the segregation of a portion of a finds that the complainants/petitioners are not entitled to the rights they are
private property titled in the name of its lawful owner, even if the claimant is not demanding, it is an erroneous interpretation of authority for that quasi-judicial body to
entitled as a beneficiary, is an issue we feel we must resolve. The quasi-judicial order private property to be awarded to future beneficiaries. The order segregation
powers of DARAB are provided in Executive Order No. 129-A, quoted hereunder in 400 hectares of the CMU land was issued on a finding that the complainants are not
so far as pertinent to the issue at bar: entitled as beneficiaries, and on an erroneous assumption that the CMU land which is
excluded or exempted under the law is subject to the coverage of the CARP. Going
beyond what was asked by the complainants who were not entitled to the relief
76

prayed the complainants who were not entitled to the relief prayed for, constitutes a
grave abuse of discretion because it implies such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction.

The education of the youth and agrarian reform are admittedly among the highest
priorities in the government socio-economic programs. In this case, neither need give
way to the other. Certainly, there must still be vast tracts of agricultural land in
Mindanao outside the CMU land reservation which can be made available to landless
peasants, assuming the claimants here, or some of them, can qualify as CARP
beneficiaries. To our mind, the taking of the CMU land which had been segregated for
educational purposes for distribution to yet uncertain beneficiaries is a gross
misinterpretation of the authority and jurisdiction granted by law to the DARAB.

The decision in this case is of far-reaching significance as far as it concerns state


colleges and universities whose resources and research facilities may be gradually
eroded by misconstruing the exemptions from the CARP. These state colleges and
universities are the main vehicles for our scientific and technological advancement in
the field of agriculture, so vital to the existence, growth and development of this
country.

It is the opinion of this Court, in the light of the foregoing analysis and for the reasons
indicated, that the evidence is sufficient to sustain a finding of grave abuse of
discretion by respondents Court of Appeals and DAR Adjudication Board. We hereby
declare the decision of the DARAB dated September 4, 1989 and the decision of the
Court of Appeals dated August 20, 1990, affirming the decision of the quasi-judicial
body, as null and void and hereby order that they be set aside, with costs against the
private respondents.

SO ORDERED

Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado,


Davide, Jr., Romero, Nocon, and Melo, JJ., concur.

Bellosillo, J., took no part.

Narvasa, C.J., is on leave.

SECOND DIVISION
77

G.R. No. 182332 February 23, 2011 regulations to govern the exclusion of agricultural lands used for livestock, poultry,
and swine raising from CARP coverage. Thus, on January 10, 1994, petitioner re-
MILESTONE FARMS, INC., Petitioner, documented its application pursuant to DAR A.O. No. 9.7
vs.
OFFICE OF THE PRESIDENT, Respondent. Acting on the said application, the DAR’s Land Use Conversion and Exemption
Committee (LUCEC) of Region IV conducted an ocular inspection on petitioner’s
DECISION property and arrived at the following findings:

NACHURA, J.: [T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the
area which served as infrastructure is 42.0000 hectares; ten (10) hectares are planted
to corn and the remaining five (5) hectares are devoted to fish culture; that the
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of livestock population are 371 heads of cow, 20 heads of horses, 5,678 heads of swine
Civil Procedure, seeking the reversal of the Court of Appeals (CA) Amended and 788 heads of cocks; that the area being applied for exclusion is far below the
Decision2 dated October 4, 2006 and its Resolution3 dated March 27, 2008. required or ideal area which is 563 hectares for the total livestock population; that the
approximate area not directly used for livestock purposes with an area of 15 hectares,
The Facts more or less, is likewise far below the allowable 10% variance; and, though not
directly used for livestock purposes, the ten (10) hectares planted to sweet corn and
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and the five (5) hectares devoted to fishpond could be considered supportive to livestock
Exchange Commission on January 8, 1960.4 Among its pertinent secondary purposes production.
are: (1) to engage in the raising of cattle, pigs, and other livestock; to acquire lands by
purchase or lease, which may be needed for this purpose; and to sell and otherwise The LUCEC, thus, recommended the exemption of petitioner’s 316.0422-hectare
dispose of said cattle, pigs, and other livestock and their produce when advisable and property from the coverage of CARP. Adopting the LUCEC’s findings and
beneficial to the corporation; (2) to breed, raise, and sell poultry; to purchase or recommendation, DAR Regional Director Percival Dalugdug (Director Dalugdug)
acquire and sell, or otherwise dispose of the supplies, stocks, equipment, issued an Order dated June 27, 1994, exempting petitioner’s 316.0422-hectare
accessories, appurtenances, products, and by-products of said business; and (3) to property from CARP.8
import cattle, pigs, and other livestock, and animal food necessary for the raising of
said cattle, pigs, and other livestock as may be authorized by law. 5 The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers),
represented by Timiano Balajadia, Sr. (Balajadia), moved for the reconsideration of
On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, the said Order, but the same was denied by Director Dalugdug in his Order dated
otherwise known as the Comprehensive Agrarian Reform Law (CARL), took effect, November 24, 1994.9 Subsequently, the Pinugay Farmers filed a letter-appeal with
which included the raising of livestock, poultry, and swine in its coverage. However, the DAR Secretary.
on December 4, 1990, this Court, sitting en banc, ruled in Luz Farms v. Secretary of
the Department of Agrarian Reform6 that agricultural lands devoted to livestock, Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against
poultry, and/or swine raising are excluded from the Comprehensive Agrarian Reform Balajadia and company before the Municipal Circuit Trial Court (MCTC) of Teresa-
Program (CARP). Baras, Rizal, docketed as Civil Case No. 781-T.10 The MCTC ruled in favor of
petitioner, but the decision was later reversed by the Regional Trial Court, Branch 80,
Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422- of Tanay, Rizal. Ultimately, the case reached the CA, which, in its Decision 11 dated
hectare property, covered by Transfer Certificate of Title Nos. (T-410434) M-15750, October 8, 1999, reinstated the MCTC’s ruling, ordering Balajadia and all defendants
(T-486101) M-7307, (T-486102) M-7308, (T-274129) M-15751, (T-486103) M-7309, therein to vacate portions of the property covered by TCT Nos. M-6013, M-8796, and
(T-486104) M-7310, (T-332694) M-15755, (T-486105) M-7311, (T-486106) M-7312, M-8791. In its Resolution12 dated July 31, 2000, the CA held that the defendants
M-8791, (T-486107) M-7313, (T-486108) M-7314, M-8796, (T-486109) M-7315, (T- therein failed to timely file a motion for reconsideration, given the fact that their
486110) M-9508, and M-6013, and located in Pinugay, Baras, Rizal, from the counsel of record received its October 8, 1999 Decision; hence, the same became
coverage of the CARL, pursuant to the aforementioned ruling of this Court in Luz final and executory.
Farms.
In the meantime, R.A. No. 6657 was amended by R.A. No. 7881, 13 which was
Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued approved on February 20, 1995. Private agricultural lands devoted to livestock,
Administrative Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and poultry, and swine raising were excluded from the coverage of the CARL. On October
78

22, 1996, the fact-finding team formed by the DAR Undersecretary for Field in his Order dated April 15, 1997, Secretary Garilao denied petitioner’s Motion for
Operations and Support Services conducted an actual headcount of the livestock Reconsideration.17
population on the property. The headcount showed that there were 448 heads of
cattle and more than 5,000 heads of swine. Aggrieved, petitioner filed its Memorandum on Appeal 18 before the Office of the
President (OP).
The DAR Secretary’s Ruling
The OP’s Ruling
On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao)
issued an Order exempting from CARP only 240.9776 hectares of the 316.0422 On February 4, 2000, the OP rendered a decision 19 reinstating Director Dalugdug’s
hectares previously exempted by Director Dalugdug, and declaring 75.0646 hectares Order dated June 27, 1994 and declared the entire 316.0422-hectare property
of the property to be covered by CARP.14 exempt from the coverage of CARP.

Secretary Garilao opined that, for private agricultural lands to be excluded from However, on separate motions for reconsideration of the aforesaid decision filed by
CARP, they must already be devoted to livestock, poultry, and swine raising as of farmer-groups Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers,
June 15, 1988, when the CARL took effect. He found that the Certificates of and the Bureau of Agrarian Legal Assistance of DAR, the OP issued a
Ownership of Large Cattle submitted by petitioner showed that only 86 heads of cattle resolution20 dated September 16, 2002, setting aside its previous decision. The
were registered in the name of petitioner’s president, Misael Vera, Jr., prior to June dispositive portion of the OP resolution reads:
15, 1988; 133 were subsequently bought in 1990, while 204 were registered from
1992 to 1995. Secretary Garilao gave more weight to the certificates rather than to
the headcount because "the same explicitly provide for the number of cattle owned by WHEREFORE, the Decision subject of the instant separate motions for
petitioner as of June 15, 1988." reconsideration is hereby SET ASIDE and a new one entered REINSTATING the
Order dated 21 January 1997 of then DAR Secretary Ernesto D. Garilao, as reiterated
in another Order of 15 April 1997, without prejudice to the outcome of the continuing
Applying the animal-land ratio (1 hectare for grazing for every head of review and verification proceedings that DAR, thru the appropriate Municipal Agrarian
cattle/carabao/horse) and the infrastructure-animal ratio (1.7815 hectares for 21 Reform Officer, may undertake pursuant to Rule III (D) of DAR Administrative Order
heads of cattle/carabao/horse, and 0.5126 hectare for 21 heads of hogs) under DAR No. 09, series of 1993.
A.O. No. 9, Secretary Garilao exempted 240.9776 hectares of the property, as
follows:
SO ORDERED.21
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
The OP held that, when it comes to proof of ownership, the reference is the
Certificate of Ownership of Large Cattle. Certificates of cattle ownership, which are
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for readily available – being issued by the appropriate government office – ought to
every 21 heads of cattle; match the number of heads of cattle counted as existing during the actual headcount.
The presence of large cattle on the land, without sufficient proof of ownership thereof,
3. 8 hectares for the 8 horses; only proves such presence.

4. 0.3809 square meters of infrastructure for the 8 horses; [and] Taking note of Secretary Garilao’s observations, the OP also held that, before an
ocular investigation is conducted on the property, the landowners are notified in
5. 138.5967 hectares for the 5,678 heads of swine.15 advance; hence, mere reliance on the physical headcount is dangerous because
there is a possibility that the landowners would increase the number of their cattle for
headcount purposes only. The OP observed that there was a big variance between
Petitioner filed a Motion for Reconsideration,16 submitting therewith copies of the actual headcount of 448 heads of cattle and only 86 certificates of ownership of
Certificates of Transfer of Large Cattle and additional Certificates of Ownership of large cattle.
Large Cattle issued to petitioner prior to June 15, 1988, as additional proof that it had
met the required animal-land ratio. Petitioner also submitted a copy of a
Disbursement Voucher dated December 17, 1986, showing the purchase of 100 Consequently, petitioner sought recourse from the CA.22
heads of cattle by the Bureau of Animal Industry from petitioner, as further proof that
it had been actively operating a livestock farm even before June 15, 1988. However, The Proceedings Before the CA and Its Rulings
79

On April 29, 2005, the CA found that, based on the documentary evidence presented, 2) Letter30 dated June 7, 2005 of both incoming Municipal Agrarian Reform
the property subject of the application for exclusion had more than satisfied the Officer (MARO) Bismark M. Elma (MARO Elma) and outgoing MARO Cesar
animal-land and infrastructure-animal ratios under DAR A.O. No. 9. The CA also C. Celi (MARO Celi) of Baras, Rizal, addressed to Provincial Agrarian
found that petitioner applied for exclusion long before the effectivity of DAR A.O. No. Reform Officer (PARO) II of Rizal, Felixberto Q. Kagahastian, (MARO
9, thus, negating the claim that petitioner merely converted the property for livestock, Report), informing the latter, among others, that Palo Alto was already under
poultry, and swine raising in order to exclude it from CARP coverage. Petitioner was development and the lots therein were being offered for sale; that there were
held to have actually engaged in the said business on the property even before June actual tillers on the subject property; that there were agricultural
15, 1988. The CA disposed of the case in this wise: improvements thereon, including an irrigation system and road projects
funded by the Government; that there was no existing livestock farm on the
WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of subject property; and that the same was not in the possession and/or control
the Office of the President dated September 16, 2002 is hereby SET ASIDE, and its of petitioner; and
Decision dated February 4, 2000 declaring the entire 316.0422 hectares exempt from
the coverage of the Comprehensive Agrarian Reform Program is hereby 3) Certification31 dated June 8, 2005, issued by both MARO Elma and
REINSTATED without prejudice to the outcome of the continuing review and MARO Celi, manifesting that the subject property was in the possession and
verification proceedings which the Department of Agrarian Reform, through the cultivation of actual occupants and tillers, and that, upon inspection,
proper Municipal Agrarian Reform Officer, may undertake pursuant to Policy petitioner maintained no livestock farm thereon.
Statement (D) of DAR Administrative Order No. 9, Series of 1993.
Four months later, the Espinas group and the DAR filed their respective
SO ORDERED.23 Manifestations.32 In its Manifestation dated November 29, 2005, the DAR confirmed
that the subject property was no longer devoted to cattle raising. Hence, in its
Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the Resolution33 dated December 21, 2005, the CA directed petitioner to file its comment
CA – as the parties did not inform the appellate court – then DAR Secretary Rene C. on the Supplement and the aforementioned Manifestations. Employing the services of
Villa (Secretary Villa) issued DAR Conversion Order No. CON-0410- a new counsel, petitioner filed a Motion to Admit Rejoinder, 34 and prayed that the
001624 (Conversion Order), granting petitioner’s application to convert portions of the MARO Report be disregarded and expunged from the records for lack of factual and
316.0422-hectare property from agricultural to residential and golf courses use. The legal basis.
portions converted – with a total area of 153.3049 hectares – were covered by TCT
Nos. M-15755 (T-332694), M-15751 (T-274129), and M-15750 (T-410434). With this With the CA now made aware of these developments, particularly Secretary Villa’s
Conversion Order, the area of the property subject of the controversy was effectively Conversion Order of November 4, 2004, the appellate court had to acknowledge that
reduced to 162.7373 hectares. the property subject of the controversy would now be limited to the remaining
162.7373 hectares. In the same token, the Espinas group prayed that this remaining
On the CA’s decision of April 29, 2005, Motions for Reconsideration were filed by area be covered by the CARP.35
farmer-groups, namely: the farmers represented by Miguel Espinas 25 (Espinas
group), the Pinugay Farmers,26 and the SAPLAG.27 The farmer-groups all claimed On October 4, 2006, the CA amended its earlier Decision. It held that its April 29,
that the CA should have accorded respect to the factual findings of the OP. Moreover, 2005 Decision was theoretically not final because DAR A.O. No. 9 required the
the farmer-groups unanimously intimated that petitioner already converted and MARO to make a continuing review and verification of the subject property. While the
developed a portion of the property into a leisure-residential-commercial estate known CA was cognizant of our ruling in Department of Agrarian Reform v. Sutton, 36 wherein
as the Palo Alto Leisure and Sports Complex (Palo Alto). we declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the exemption
of the subject property from the CARP, not on the basis of DAR A.O. No. 9, but on the
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured strength of evidence such as the MARO Report and Certification, and the
Evidence pursuant to DAR Administrative Order No. 9, Series of 199328 (Supplement) Katunayan37 issued by the Punong Barangay, Alfredo Ruba (Chairman Ruba), of
dated June 15, 2005, the Espinas group submitted the following as evidence: Pinugay, Baras, Rizal, showing that the subject property was no longer operated as a
livestock farm. Moreover, the CA held that the lease agreements,38 which petitioner
submitted to prove that it was compelled to lease a ranch as temporary shelter for its
1) Conversion Order29 dated November 4, 2004, issued by Secretary Villa, cattle, only reinforced the DAR’s finding that there was indeed no existing livestock
converting portions of the property from agricultural to residential and golf farm on the subject property. While petitioner claimed that it was merely forced to do
courses use, with a total area of 153.3049 hectares; thus, the Espinas group so to prevent further slaughtering of its cattle allegedly committed by the occupants,
prayed that the remaining 162.7373 hectares (subject property) be covered the CA found the claim unsubstantiated. Furthermore, the CA opined that petitioner
by the CARP; should have asserted its rights when the irrigation and road projects were introduced
80

by the Government within its property. Finally, the CA accorded the findings of MARO On May 24, 2007, [petitioner’s] security guard and third witness, Rodolfo G. Febrada,
Elma and MARO Celi the presumption of regularity in the performance of official submitted his Judicial Affidavit and was cross-examined by counsel for fa[r]mers-
functions in the absence of evidence proving misconduct and/or dishonesty when movants and SAPLAG. Farmers-movants also marked their documentary exhibits.
they inspected the subject property and rendered their report. Thus, the CA disposed:
Thereafter, the parties submitted their respective Formal Offers of Evidence.
WHEREFORE, this Court’s Decision dated April 29, 2005 is hereby amended in that Farmers-movants and SAPLAG filed their objections to [petitioner’s] Formal Offer of
the exemption of the subject landholding from the coverage of the Comprehensive Evidence. Later, [petitioner] and farmers-movants filed their respective Memoranda.
Agrarian Reform Program is hereby lifted, and the 162.7373 hectare-agricultural
portion thereof is hereby declared covered by the Comprehensive Agrarian Reform In December 2007, this Court issued a Resolution on the parties’ offer of evidence
Program. and considered [petitioner’s] Motion for Reconsideration submitted for resolution. 45

SO ORDERED.39 Finally, petitioner’s motion for reconsideration was denied by the CA in its
Resolution46 dated March 27, 2008. The CA discarded petitioner’s reliance on Sutton.
Unperturbed, petitioner filed a Motion for Reconsideration.40 On January 8, 2007, It ratiocinated that the MARO Reports and the DAR’s Manifestation could not be
MARO Elma, in compliance with the Memorandum of DAR Regional Director disregarded simply because DAR A.O. No. 9 was declared unconstitutional. The
Dominador B. Andres, tendered another Report41 reiterating that, upon inspection of Sutton ruling was premised on the fact that the Sutton property continued to operate
the subject property, together with petitioner’s counsel-turned witness, Atty. Grace as a livestock farm. The CA also reasoned that, in Sutton, this Court did not remove
Eloisa J. Que (Atty. Que), PARO Danilo M. Obarse, Chairman Ruba, and several from the DAR the power to implement the CARP, pursuant to the latter’s authority to
occupants thereof, he, among others, found no livestock farm within the subject oversee the implementation of agrarian reform laws under Section 50 47 of the CARL.
property. About 43 heads of cattle were shown, but MARO Elma observed that the Moreover, the CA found:
same were inside an area adjacent to Palo Alto. Subsequently, upon Atty. Que’s
request for reinvestigation, designated personnel of the DAR Provincial and Regional Petitioner-appellant claimed that they had 43 heads of cattle which are being cared
Offices (Investigating Team) conducted another ocular inspection on the subject for and pastured by 4 individuals. To prove its ownership of the said cattle, petitioner-
property on February 20, 2007. The Investigating Team, in its Report42 dated appellant offered in evidence 43 Certificates of Ownership of Large Cattle.
February 21, 2007, found that, per testimony of petitioner’s caretaker, Rogelio Significantly, however, the said Certificates were all dated and issued on November
Ludivices (Roger),43 petitioner has 43 heads of cattle taken care of by the following 24, 2006, nearly 2 months after this Court rendered its Amended Decision lifting the
individuals: i) Josefino Custodio (Josefino) – 18 heads; ii) Andy Amahit – 15 heads; exemption of the 162-hectare portion of the subject landholding. The acquisition of
and iii) Bert Pangan – 2 heads; that these individuals pastured the herd of cattle such cattle after the lifting of the exemption clearly reveals that petitioner-appellant
outside the subject property, while Roger took care of 8 heads of cattle inside the was no longer operating a livestock farm, and suggests an effort to create a
Palo Alto area; that 21 heads of cattle owned by petitioner were seen in the area semblance of livestock-raising for the purpose of its Motion for Reconsideration.48
adjacent to Palo Alto; that Josefino confirmed to the Investigating Team that he takes
care of 18 heads of cattle owned by petitioner; that the said Investigating Team saw 9
heads of cattle in the Palo Alto area, 2 of which bore "MFI" marks; and that the 9 On petitioner’s assertion that between MARO Elma’s Report dated January 8, 2007
heads of cattle appear to have matched the Certificates of Ownership of Large Cattle and the Investigating Team’s Report, the latter should be given credence, the CA held
submitted by petitioner. that there were no material inconsistencies between the two reports because both
showed that the 43 heads of cattle were found outside the subject property.
Because of the contentious factual issues and the conflicting averments of the
parties, the CA set the case for hearing and reception of evidence on April 24, Hence, this Petition assigning the following errors:
2007.44 Thereafter, as narrated by the CA, the following events transpired:
I.
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses,
namely, [petitioner’s] counsel, [Atty. Que], and the alleged caretaker of [petitioner’s] THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
farm, [Roger], who were both cross-examined by counsel for farmers-movants and HELD THAT LANDS DEVOTED TO LIVESTOCK FARMING WITHIN THE
SAPLAG. [Petitioner] and SAPLAG then marked their documentary exhibits. MEANING OF LUZ FARMS AND SUTTON, AND WHICH ARE THEREBY
EXEMPT FROM CARL COVERAGE, ARE NEVERTHELESS SUBJECT TO
DAR’S CONTINUING VERIFICATION AS TO USE, AND, ON THE BASIS
81

OF SUCH VERIFICATION, MAY BE ORDERED REVERTED TO Petitioner relies on the 1997 LUCEC and DAR findings that the subject property was
AGRICULTURAL CLASSIFICATION AND COMPULSORY ACQUISITION[;] devoted to livestock farming, and on the 1999 CA Decision which held that the
occupants of the property were squatters, bereft of any authority to stay and possess
II. the property.50

GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO On one hand, the farmer-groups, represented by the Espinas group, contend that
REVERTED TO AGRICULTURAL CLASSIFICATION, STILL THE they have been planting rice and fruit-bearing trees on the subject property, and
PROCEEDINGS FOR SUCH PURPOSE BELONGS TO THE EXCLUSIVE helped the National Irrigation Administration in setting up an irrigation system therein
ORIGINAL JURISDICTION OF THE DAR, BEFORE WHICH THE in 1997, with a produce of 1,500 to 1,600 sacks of palay each year; that petitioner
CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND came to court with unclean hands because, while it sought the exemption and
AVAIL THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO exclusion of the entire property, unknown to the CA, petitioner surreptitiously filed for
THE COURT OF APPEALS EXERCISING APPELLATE JURISDICTION conversion of the property now known as Palo Alto, which was actually granted by the
OVER ISSUES COMPLETELY UNRELATED TO REVERSION [; AND] DAR Secretary; that petitioner’s bad faith is more apparent since, despite the
conversion of the 153.3049-hectare portion of the property, it still seeks to exempt the
entire property in this case; and that the fact that petitioner applied for conversion is
III. an admission that indeed the property is agricultural. The farmer-groups also contend
that petitioner’s reliance on Luz Farms and Sutton is unavailing because in these
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND cases there was actually no cessation of the business of raising cattle; that what is
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT being exempted is the activity of raising cattle and not the property itself; that
THE PROPERTY IN DISPUTE IS NO LONGER BEING USED FOR exemptions due to cattle raising are not permanent; that the declaration of DAR A.O.
LIVESTOCK FARMING.49 No. 9 as unconstitutional does not at all diminish the mandated duty of the DAR, as
the lead agency of the Government, to implement the CARL; that the DAR, vested
Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are with the power to identify lands subject to CARP, logically also has the power to
classified as industrial lands, hence, outside the ambit of the CARP; that Luz Farms, identify lands which are excluded and/or exempted therefrom; that to disregard DAR’s
Sutton, and R.A. No. 7881 clearly excluded such lands on constitutional grounds; that authority on the matter would open the floodgates to abuse and fraud by
petitioner’s lands were actually devoted to livestock even before the enactment of the unscrupulous landowners; that the factual finding of the CA that the subject property
CARL; that livestock farms are exempt from the CARL, not by reason of any act of the is no longer a livestock farm may not be disturbed on appeal, as enunciated by this
DAR, but because of their nature as industrial lands; that petitioner’s property was Court; that DAR conducted a review and monitoring of the subject property by virtue
admittedly devoted to livestock farming as of June 1988 and the only issue before of its powers under the CARL; and that the CA has sufficient discretion to admit
was whether or not petitioner’s pieces of evidence comply with the ratios provided evidence in order that it could arrive at a fair, just, and equitable ruling in this case. 51
under DAR A.O. No. 9; and that DAR A.O. No. 9 having been declared as
unconstitutional, DAR had no more legal basis to conduct a continuing review and On the other hand, respondent OP, through the Office of the Solicitor General (OSG),
verification proceedings over livestock farms. Petitioner argues that, in cases where claims that the CA correctly held that the subject property is not exempt from the
reversion of properties to agricultural use is proper, only the DAR has the exclusive coverage of the CARP, as substantial pieces of evidence show that the said property
original jurisdiction to hear and decide the same; hence, the CA, in this case, is not exclusively devoted to livestock, swine, and/or poultry raising; that the issues
committed serious errors when it ordered the reversion of the property and when it presented by petitioner are factual in nature and not proper in this case; that under
considered pieces of evidence not existing as of June 15, 1988, despite its lack of Rule 43 of the 1997 Rules of Civil Procedure, questions of fact may be raised by the
jurisdiction; that the CA should have remanded the case to the DAR due to conflicting parties and resolved by the CA; that due to the divergence in the factual findings of
factual claims; that the CA cannot ventilate allegations of fact that were introduced for the DAR and the OP, the CA was duty bound to review and ascertain which of the
the first time on appeal as a supplement to a motion for reconsideration of its first said findings are duly supported by substantial evidence; that the subject property
decision, use the same to deviate from the issues pending review, and, on the basis was subject to continuing review and verification proceedings due to the then
thereof, declare exempt lands reverted to agricultural use and compulsorily covered prevailing DAR A.O. No. 9; that there is no question that the power to determine if a
by the CARP; that the "newly discovered [pieces of] evidence" were not introduced in property is subject to CARP coverage lies with the DAR Secretary; that pursuant to
the proceedings before the DAR, hence, it was erroneous for the CA to consider such power, the MARO rendered the assailed reports and certification, and the DAR
them; and that piecemeal presentation of evidence is not in accord with orderly itself manifested before the CA that the subject property is no longer devoted to
justice. Finally, petitioner submits that, in any case, the CA gravely erred and livestock farming; and that, while it is true that this Court’s ruling in Luz Farms
committed grave abuse of discretion when it held that the subject property was no declared that agricultural lands devoted to livestock, poultry, and/or swine raising are
longer used for livestock farming as shown by the Report of the Investigating Team. excluded from the CARP, the said ruling is not without any qualification. 52
82

In its Reply53 to the farmer-groups’ and to the OSG’s comment, petitioner counters proceedings before the CA by submitting pleadings and pieces of documentary
that the farmer-groups have no legal basis to their claims as they admitted that they evidence, such as the Investigating Team’s Report and judicial affidavits. The CA also
entered the subject property without the consent of petitioner; that the rice plots went further by setting the case for hearing. In all these proceedings, all the parties’
actually found in the subject property, which were subsequently taken over by rights to due process were amply protected and recognized.
squatters, were, in fact, planted by petitioner in compliance with the directive of then
President Ferdinand Marcos for the employer to provide rice to its employees; that With the procedural issue disposed of, we find that petitioner’s arguments fail to
when a land is declared exempt from the CARP on the ground that it is not persuade. Its invocation of Sutton is unavailing. In Sutton, we held:
agricultural as of the time the CARL took effect, the use and disposition of that land is
entirely and forever beyond DAR’s jurisdiction; and that, inasmuch as the subject
property was not agricultural from the very beginning, DAR has no power to regulate In the case at bar, we find that the impugned A.O. is invalid as it contravenes the
the same. Petitioner also asserts that the CA cannot uncharacteristically assume the Constitution. The A.O. sought to regulate livestock farms by including them in the
role of trier of facts and resolve factual questions not previously adjudicated by the coverage of agrarian reform and prescribing a maximum retention limit for their
lower tribunals; that MARO Elma rendered the assailed MARO reports with bias ownership. However, the deliberations of the 1987 Constitutional Commission show a
against petitioner, and the same were contradicted by the Investigating Team’s clear intent to exclude, inter alia, all lands exclusively devoted to livestock, swine
Report, which confirmed that the subject property is still devoted to livestock farming; and poultry-raising. The Court clarified in the Luz Farms case that livestock, swine
and that there has been no change in petitioner’s business interest as an entity and poultry-raising are industrial activities and do not fall within the definition of
engaged in livestock farming since its inception in 1960, though there was admittedly "agriculture" or "agricultural activity." The raising of livestock, swine and poultry is
a decline in the scale of its operations due to the illegal acts of the squatter- different from crop or tree farming. It is an industrial, not an agricultural, activity. A
occupants. great portion of the investment in this enterprise is in the form of industrial fixed
assets, such as: animal housing structures and facilities, drainage, waterers and
blowers, feedmill with grinders, mixers, conveyors, exhausts and generators,
Our Ruling extensive warehousing facilities for feeds and other supplies, anti-pollution equipment
like bio-gas and digester plants augmented by lagoons and concrete ponds,
The Petition is bereft of merit. deepwells, elevated water tanks, pumphouses, sprayers, and other technological
appurtenances.
Let it be stressed that when the CA provided in its first Decision that continuing review
and verification may be conducted by the DAR pursuant to DAR A.O. No. 9, the latter Clearly, petitioner DAR has no power to regulate livestock farms which have been
was not yet declared unconstitutional by this Court. The first CA Decision was exempted by the Constitution from the coverage of agrarian reform. It has exceeded
promulgated on April 29, 2005, while this Court struck down as unconstitutional DAR its power in issuing the assailed A.O.59
A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let it be emphasized
that the Espinas group filed the Supplement and submitted the assailed MARO Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to
reports and certification on June 15, 2005, which proved to be adverse to petitioner’s those of Sutton because, in Sutton, the subject property remained a livestock farm.
case. Thus, it could not be said that the CA erred or gravely abused its discretion in We even highlighted therein the fact that "there has been no change of business
respecting the mandate of DAR A.O. No. 9, which was then subsisting and in full interest in the case of respondents."60 Similarly, in Department of Agrarian Reform v.
force and effect. Uy,61 we excluded a parcel of land from CARP coverage due to the factual findings of
the MARO, which were confirmed by the DAR, that the property was entirely devoted
While it is true that an issue which was neither alleged in the complaint nor raised to livestock farming. However, in A.Z. Arnaiz Realty, Inc., represented by Carmen Z.
during the trial cannot be raised for the first time on appeal as it would be offensive to Arnaiz v. Office of the President; Department of Agrarian Reform; Regional Director,
the basic rules of fair play, justice, and due process,54 the same is not without DAR Region V, Legaspi City; Provincial Agrarian Reform Officer, DAR Provincial
exception,55 such as this case. The CA, under Section 3,56 Rule 43 of the Rules of Office, Masbate, Masbate; and Municipal Agrarian Reform Officer, DAR Municipal
Civil Procedure, can, in the interest of justice, entertain and resolve factual issues. Office, Masbate, Masbate,62 we denied a similar petition for exemption and/or
After all, technical and procedural rules are intended to help secure, and not exclusion, by according respect to the CA’s factual findings and its reliance on the
suppress, substantial justice. A deviation from a rigid enforcement of the rules may findings of the DAR and the OP that
thus be allowed to attain the prime objective of dispensing justice, for dispensation of
justice is the core reason for the existence of courts.57 Moreover, petitioner cannot the subject parcels of land were not directly, actually, and exclusively used for
validly claim that it was deprived of due process because the CA afforded it all the pasture.63
opportunity to be heard.58 The CA even directed petitioner to file its comment on the
Supplement, and to prove and establish its claim that the subject property was
excluded from the coverage of the CARP. Petitioner actively participated in the
83

Petitioner’s admission that, since 2001, it leased another ranch for its own livestock is WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision
fatal to its cause.64 While petitioner advances a defense that it leased this ranch dated October 4, 2006 and Resolution dated March 27, 2008 are AFFIRMED. No
because the occupants of the subject property harmed its cattle, like the CA, we find it costs.
surprising that not even a single police and/or barangay report was filed by petitioner
to amplify its indignation over these alleged illegal acts. Moreover, we accord respect SO ORDERED.
to the CA’s keen observation that the assailed MARO reports and the Investigating
Team’s Report do not actually contradict one another, finding that the 43 cows, while
owned by petitioner, were actually pastured outside the subject property.

Finally, it is established that issues of Exclusion and/or Exemption are characterized


as Agrarian Law Implementation (ALI) cases which are well within the DAR
Secretary’s competence and jurisdiction.65 Section 3, Rule II of the 2003 Department
of Agrarian Reform Adjudication Board Rules of Procedure provides:

Section 3. Agrarian Law Implementation Cases.

The Adjudicator or the Board shall have no jurisdiction over matters involving the
administrative implementation of RA No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL) of 1988 and other agrarian laws as
enunciated by pertinent rules and administrative orders, which shall be under the
exclusive prerogative of and cognizable by the Office of the Secretary of the DAR in
accordance with his issuances, to wit:

xxxx

3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and
poultry raising.

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of
his legal mandate to exercise jurisdiction and authority over all ALI cases. To
succumb to petitioner’s contention that "when a land is declared exempt from the
CARP on the ground that it is not agricultural as of the time the CARL took effect, the
use and disposition of that land is entirely and forever beyond DAR’s jurisdiction" is
dangerous, suggestive of self-regulation. Precisely, it is the DAR Secretary who is SPECIAL FIRST DIVISION
vested with such jurisdiction and authority to exempt and/or exclude a property from
CARP coverage based on the factual circumstances of each case and in accordance G.R. No. 112526 March 16, 2005
with law and applicable jurisprudence. In addition, albeit parenthetically, Secretary
Villa had already granted the conversion into residential and golf courses use of
STA. ROSA REALTY DEVELOPMENT CORPORATION, Petitioner,
nearly one-half of the entire area originally claimed as exempt from CARP coverage
vs.
because it was allegedly devoted to livestock production.lawphil1
JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P.
AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS,
In sum, we find no reversible error in the assailed Amended Decision and Resolution JAIME A. BURGOS, FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO A.
of the CA which would warrant the modification, much less the reversal, thereof. CANUBAS, REYNALDO CARINGAL, QUIRINO C. CASALME, BENIGNO A.
CRUZAT, ELINO A. CRUZAT, GREGORIO F. CRUZAT, RUFINO C. CRUZAT,
SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO DE
SAGUN, FELICISIMO A. GONZALES, FRANCISCO A. GONZALES, GREGORIO A.
84

GONZALES, LEODEGARIO N. GONZALES, PASCUAL P. GONZALES, ROMEO TANTENGCO, LODRING CARAAN, FREDO MERCADO, TOMMY
ROLANDO A. GONZALES, FRANCISCO A. JUANGCO, GERVACIO A. JUANGCO, MENDOZA, RAFAEL ONTE, REY MANAIG, DICK GASPAR, ANTONIO MALLARI,
LOURDES U. LUNA, ANSELMO M. MANDANAS, CRISANTO MANDANAS, ALFREDO ANIEL, BARIT, ALBERTO MANGUE, AGATON LUCIDO, ONYONG
EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G. MANDANAS, CANTAL, BAYANI LACSON, ISKO CABILION, MANGUIAT, IGME OPINA,
TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B. MARQUEZ, VILARETE, PEDRO BENEDICTO, HECTOR BICO, RUFO SANCHEZ, LARRY DE
ARMANDO P. MATIENZO, DANIEL D. MATIENZO, MAXIMINO MATIENZO, LEON, BARIVAR SAMSON and ROMEO NAVARRO, Respondents.
PACENCIA P. MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T. PEREZ,
MARIANITO T. PEREZ, SEVERO M. PEREZ, INOCENCIA S. PASQUIZA, DECISION
BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE, PABLO A.
PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA,
DOMINGO VILLA, JUAN T. VILLA, MARIO C. VILLA, NATIVIDAD B. VILLA, AUSTRIA-MARTINEZ, J.:
JACINTA S. ALVARADO, RODOLFO ANGELES, DOMINGO A. CANUBAS,
EDGARDO L. CASALME, QUIRINO DE LEON, LEONILO M. ENRIQUEZ, CLAUDIA By virtue of the En Banc Resolution issued on January 13, 2004, the Court authorized
P. GONZALES, FELISA R. LANGUE, QUINTILLANO LANGUE, REYNALDO the Special First Division to suspend the Rules so as to allow it to consider and
LANGUE, ROMEO S. LANGUE, MARIANITO T. PEREZ, INOCENCIA S. resolve the second Motion for Reconsideration of respondents, 1after the motion was
PASQUIZA, AQUILINO B. SUBOL, BONIFACIO VILLA, ROGELIO AYENDE, heard on oral arguments on August 13, 2003. On July 9, 2004, 2 the Court resolved to
ANTONIO B. FERNANDEZ, ZACARIAS HERRERA, REYNARIO U. LAZO, submit for resolution the second Motion for Reconsideration in G.R. No.
AGAPITO MATIENZO, DIONISIO F. PETATE, LITO G. REYES, JOSE M. SUBOL, 112526 together with G.R. No. 118338 in view of the Resolution of the Court dated
CELESTINO G. TOPI NO, ROSA C. AMANTE, SOTERA CASALME, REMIGIO M. January 15, 2001 issued in G.R. No. 118838,3 consolidating the latter case with G.R.
SILVERIO, THE COURT OF APPEALS, THE SECRETARY OF AGRARIAN No. 112526, the issues therein being interrelated.4 Hence, the herein Amended
REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, Decision.
LAND BANK OF THE PHILIPPINES, REGISTER OF DEEDS OF LAGUNA,
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES REGIONAL The factual background of the two cases is as follows:
EXECUTIVE DIRECTOR FOR REGION IV and REGIONAL AGRARIAN REFORM
OFFICER FOR REGION IV., Respondents.
The Canlubang Estate in Laguna is a vast landholding previously titled in the name of
the late Speaker and Chief Justice Jose Yulo, Sr. Within this estate are two parcels of
x-------------------x land (hereinafter referred to as the "subject property") covered by TCT Nos. 81949
and 84891 measuring 254.766 hectares and part of Barangay Casile, subsequently
G.R. No. 118838 March 16, 2005 titled in the name of Sta. Rosa Realty Development Corporation (SRRDC), the
majority stockholder of which is C.J. Yulo and Sons, Inc.
JUAN B. AMANTE, IGNACIO PETATE, DOMINGO CANUBAS, FLORENCIO
CANUBAS, CRESENCIO AMANTE, QUIRINO CASALME, LEODEGARIO The subject property was involved in civil suits and administrative proceedings that
GONZALES, DOMINGO VILLA, JAIME BURGOS, NICOMEDES PETATE, led to the filing of G.R. Nos. 112526 and 118838, thus:
MAXIMINO MATIENZO, MAXIMO CANUBAS, ELINO CRUZAT, RUFINO CRUZAT,
FELICISIMO GONZALES, QUINTILLANO LANGUE, TEODORO MANDANAS, Injunction Case Filed by Amante, et al.
SERGIO CRUZAT, AGAPITO MATIENZO and SEVERINO DE SAGUM, Petitioner,
vs.
LUIS YULO, JESUS MIGUEL YULO, C-J YULO & SONS, INC., STA. ROSA On December 6, 1985, Amante, et al., who are the private respondents in G.R. No.
REALTY DEVELOPMENT CORPORATION, JOSE LAMBATIN, LAUREANO 112526 and petitioners in G.R. No. 118838, instituted an action for injunction with
LAUREL, GALICANO MAILOM, JR., REYNALDO OPENA, AGAPITO PRECILLA, damages in the Regional Trial Court of Laguna (Branch 24) against Luis Yulo,
DANILO SUMADSAD, ALFREDO SUMADSAD, JUAN CANTAL, INIGO MENDOZA, SRRDC, and several SRRDC security personnel, docketed as Civil Case No. B-2333.
ALEJANDRO SANCHEZ, SENADOR RODRIGUEZ, VICTOR MOLINAR, DANILO Amante, et al. alleged that: they are residents of Barangay Casile, Cabuyao, Laguna,
CANLOBO, RESTING CARAAN, IGNACIO VERGARA, HANDO MERCADO, which covers an area of around 300 hectares; in 1910, their ancestors started
FAUSTINO MAILOM, CONRADO BARRIENTOS, RENATO VISAYA, DANTE occupying the area, built their houses and planted fruit-bearing trees thereon, and
BATHAN, SERAPIO NATIVIDAD, HONESTO TENORIO, NESTOR MERCADO, since then, have been peacefully occupying the land; some time in June 3, 1985,
BIENVENIDO OLFATO, RENE LIRAZAN, RUDY CANLOBO, BASIOLIO SRRDC’s security people illegally entered Bgy. Casile and fenced the area; SRRDC’s
MULINGTAPANG, ITO GONZALES, RENATO RINO, TINOY MABAGA, PACIO men also entered the barangay on November 4, 1985, cut down the trees, burned
PADILLA, JOHNNY REAMILLO, ROLANDO CARINGAL, IGNOY VILLAMAYOR, their huts, and barred the lone jeepney from entering the Canlubang Sugar Estate; as
85

a result of these acts, Amante, et al. were deprived of possession and cultivation of SO ORDERED.11
their lands. Thus, they claimed damages, sought the issuance of permanent
injunction and proposed that a right of way be declared. 5 Nominal damages were awarded by the CA because it found that SRRDC violated
Amante, et al.’s rights as possessors of the subject property. 12
In their Answer, the defendants denied the allegations and disclaimed any control and
supervision over its security personnel. Defendant SRRDC also alleged that as the Amante, et al. filed a motion for reconsideration thereof, pointing out the DARAB’s
real owner of the property, it was the one that suffered damages due to the decision placing the property under compulsory acquisition, and the CA decision
encroachment on the property.6 in CA-G.R. SP No. 27234, affirming the same.13 The CA, however, denied the motion,
with the modification that only SRRDC and the defendants-security guards should be
A writ of preliminary injunction was issued by the trial court on August 17, 1987, 7 but held jointly and severally liable for the nominal damages awarded. It also made the
this was subsequently dissolved by the Court of Appeals (CA) on April 22, 1988 in its clarification that the decision should not preempt any judgment or prejudice the right
decision in CA-G.R. SP No. 13908.8 of any party in the agrarian reform case pending before the Supreme Court (G.R. No.
112526).14
After trial on the merits, the trial court, on January 20, 1992, rendered a decision
ordering Amante, et al. to vacate the property, the dispositive portion of which reads: Thus, Amante, et al. filed on March 2, 1995, herein petition, docketed as G.R. No.
118838 on the following grounds:
WHEREFORE, premises considered, judgment is hereby rendered in favor
of the defendants and against the plaintiffs hereby dismissing the complaint 4.1. The Court of Appeals decided the case contrary to law or applicable
and amended complaint. Supreme Court decisions because:

The plaintiffs are hereby ordered to vacate the parcels of land belonging to 4.1.1 First, petitioners may not be lawfully evicted from their landholdings
the defendants Luis Yulo and Sta. Rosa Realty. They are likewise enjoined considering that:
from entering the subject parcels of land.
-- (a) Petitioners are already the registered owners under the
Although attorney’s fees and expenses of litigation are recoverable in case torrens system of the properties in question since February 26,
of a clearly unfounded civil action against the plaintiff (Enervida vs. De la 1992 by virtue of RA 6657 or the Comprehensive Agrarian Reform
Torre, 55 SCRA 339), this Court resolves not to award attorney’s fees etc. in Law;
favor of the defendants because the plaintiffs appear to have acted in good
faith in filing the present civil action (Salao vs. Salao, 70 SCRA 65) and that -- (b) The Court of Appeals has affirmed the Regional Trial Court of
it would not be just and equitable to award the same in the case at bar. Laguna’s dismissal of the ejectment cases filed by respondent
(Liwanag vs. Court of Appeals, 121 SCRA 354) Accordingly, the other reliefs SRRDC against petitionerS; and
prayed for by the defendants are hereby dismissed.
-- (c) Assuming for the sake of argument only that petitioners are
SO ORDERED.9 not yet the registered owners of the properties in question,
respondents may not raise the issue of ownership in this case for
Amante, et al. appealed the aforesaid decision to the CA, docketed as CA-G.R. CV injunction with damages, the same to be ventilated in a separate
No. 38182. action, not in this case brought to prevent respondents from
committing further acts of dispossession [Bacar v. del Rosario et
On June 28, 1994, the CA affirmed with modification the decision of the trial court in al., 171 SCRA 451 (1989)].
the injunction case. The dispositive portion of the appellate court’s decision10 reads as
follows: 4.1.2 Second, petitioners are entitled to moral, exemplary damages and
attorney’s fees, instead of mere nominal damages, considering that the
WHEREFORE, the judgment herein appealed from is hereby AFFIRMED, Court of Appeals found respondents to have unlawfully and illegally
with the modification that the defendants-appellees are hereby ordered, disturbed petitioners’ peaceful and continuous possession. 15
jointly and severally, to pay the plaintiffs-appellants nominal damages in the
amount of P5,000.00 per plaintiff. No pronouncement as to costs. Ejectment Cases Filed by SRRDC
86

Between October 1986 and August 1987, after the injunction case was filed by purposes, as evidenced by the Certification of the Department of Agriculture,
Amante, et al., SRRDC filed with the Municipal Trial Court (MTC) of Cabuyao, municipality of Cabuyao, Laguna.
Laguna, several complaints for forcible entry with preliminary injunction and damages
against Amante, et al., docketed as Civil Cases Nos. 250, 258, 260, 262 and 266. On September 8, 1989, MARO Belen dela Torre made a summary investigation
SRRDC alleged that some time in July 1987, they learned that Amante, et al., without report and forwarded the Compulsory Acquisition Folder Indorsement (CAFI) to the
their authority and through stealth and strategy, were clearing, cultivating and planting Provincial Agrarian Reform Officer (hereafter, PARO).
on the subject property; and that despite requests from SRRDC’s counsel, Amante, et
al. refused to vacate the property, prompting them to file the ejectment
cases.16 Amante, et al. denied that SRRDC are the absolute owners of the property, On September 21, 1989, PARO Durante Ubeda forwarded his endorsement
stating that they have been in peaceful possession thereof, through their of the compulsory acquisition to the Secretary of Agrarian Reform.
predecessors-in-interest, since 1910.17
On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau
On May 24, 1991, the MTC-Cabuyao rendered its decision in favor of SRRDC. of Land Acquisition and Development, DAR forwarded two (2) Compulsory
Amante, et al. were ordered to surrender possession and vacate the subject property. Acquisition Claim Folders covering the landholding of SRRDC, covered by
The decision was appealed to the Regional Trial Court of Biñan, Laguna (Assisting TCT Nos. T-81949 and T-84891 to the President, Land Bank of the
Court). Philippines for further review and evaluation.

On February 18, 1992, the RTC dismissed the ejectment cases on the ground that On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor
the subject property is an agricultural land being tilled by Amante, et al., hence it is Santiago sent two (2) notices of acquisition to petitioner, stating that
the Department of Agrarian Reform (DAR), which has jurisdiction over the petitioner’s landholdings covered by TCT Nos. T-81949 and T-84891,
dispute.18 The RTC’s dismissal of the complaints was brought to the CA via a petition containing an area of 188.2858 and 58.5800 hectares, valued
for review, docketed as CA-G.R. SP No. 33382.19 In turn, the CA dismissed the at P4,417,735.65 and P1,220,229.93, respectively, had been placed
petition per its Decision dated January 17, 1995 on the ground that SRRDC failed to under the Comprehensive Agrarian Reform Program.
show any prior physical possession of the subject property that would have justified
the filing of the ejectment cases.20 Also, the CA did not sustain the RTC’s finding that On February 6, 1990, petitioner SRRDC in two letters separately addressed
the subject properties are agricultural lands and Amante, et al. are tenant/farmers to Secretary Florencio B. Abad and the Director, Bureau of Land Acquisition
thereof, as the evidence on record does not support such finding. The parties did not and Distribution, sent its formal protest, protesting not only the amount of
file any motion for reconsideration from the Court of Appeals’ dismissal, hence, it compensation offered by DAR for the property but also the two (2) notices of
became final and executory.21 acquisition.

Administrative Proceedings On March 17, 1990, Secretary Abad referred the case to the DARAB for
summary proceedings to determine just compensation under R.A. No.
While the injunction and ejectment cases were still in process, it appears that in 6657, Section 16.
August, 1989, the Municipal Agrarian Reform Office (MARO) issued a Notice of
Coverage to SRRDC, informing petitioners that the property covered by TCT Nos. T- On March 23, 1990, the LBP returned the two (2) claim folders previously
81949, T-84891 and T-92014 is scheduled for compulsory acquisition under the referred for review and evaluation to the Director of BLAD mentioning its
Comprehensive Agrarian Reform Program (CARP).22 SRRDC filed its "Protest and inability to value the SRRDC landholding due to some deficiencies.
Objection" with the MARO on the grounds that the area was not appropriate for
agricultural purposes, as it was rugged in terrain with slopes of 18% and above, and On March 28, 1990, Executive Director Emmanuel S. Galvez wrote the
that the occupants of the land were squatters, who were not entitled to any land as Land Bank President Deogracias Vistan to forward the two (2) claim
beneficiaries.23 Thereafter, as narrated in the Decision of the Court dated October 12, folders involving the property of SRRDC to the DARAB for it to conduct
2001 in G.R. No. 112526, the following proceedings ensued: summary proceedings to determine the just compensation for the land.

On August 29, 1989, the farmer beneficiaries together with the BARC chairman On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines
answered the protest and objection stating that the slope of the land is not 18% but stating that its property under the aforesaid land titles were exempt from
only 5-10% and that the land is suitable and economically viable for agricultural CARP coverage because they had been classified as watershed area and
were the subject of a pending petition for land conversion.
87

On May 10, 1990, Director Narciso Villapando of BLAD turned over the two At the hearing on April 23, 1991, certification from Deputy Zoning
(2) claim folders (CACF’s) to the Executive Director of the DAR Adjudication Administrator Generoso B. Opina was presented. The certification issued on
Board for proper administrative valuation. Acting on the CACF’s, on September 8, 1989, stated that the parcels of land subject of the case were
September 10, 1990, the Board promulgated a resolution asking the classified as "Industrial Park" per Sangguniang Bayan Resolution No. 45-89
office of the Secretary of Agrarian Reform (DAR) to first resolve two (2) dated March 29, 1989.
issues before it proceeds with the summary land valuation
proceedings. To avert any opportunity that the DARAB might distribute the lands to the
farmer beneficiaries, on April 30, 1991, petitioner filed a petition with DARAB
The issues that need to be threshed out were as follows: (1) whether the to disqualify private respondents as beneficiaries. However, DARAB refused
subject parcels of land fall within the coverage of the Compulsory Acquisition to address the issue of beneficiaries.24
Program of the CARP; and (2) whether the petition for land conversion of the
parcels of land may be granted. ...

On December 7, 1990, the Office of the Secretary, DAR, through the On December 19, 1991, the DARAB promulgated a decision, affirming the dismissal
Undersecretary for Operations (Assistant Secretary for Luzon of the protest of SRRDC against the compulsory coverage of the property covered by
Operations) and the Regional Director of Region IV, submitted a report TCT Nos. 81949 and 84891. The decretal portion of the decision reads:
answering the two issues raised. According to them, firstly, by virtue of
the issuance of the notice of coverage on August 11, 1989, and notice
of acquisition on December 12, 1989, the property is covered under WHEREFORE, based on the foregoing premises, the Board hereby orders:
compulsory acquisition. Secondly, Administrative Order No. 1, Series
of 1990, Section IV D also supports the DAR position on the coverage 1. The dismissal for lack of merit of the protest against the compulsory
of the said property. During the consideration of the case by the Board, coverage of the landholdings of Sta. Rosa Realty Development Corporation
there was no pending petition for land conversion specifically (Transfer Certificates of Title Nos. 81949 and 84891 with an area of 254.766
concerning the parcels of land in question. hectares) in Barangay Casile, Municipality of Cabuyao, Province of Laguna
under the Comprehensive Agrarian Reform Program is hereby affirmed;
On February 19, 1991, the Board sent a notice of hearing to all the parties
interested, setting the hearing for the administrative valuation of the subject 2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty
parcels of land on March 6, 1991. However, on February 22, 1991, Atty. Ma. Development Corporation the amount of Seven Million Eight Hundred Forty-
Elena P. Hernandez-Cueva, counsel for SRRDC, wrote the Board One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-Four centavos
requesting for its assistance in the reconstruction of the records of the case (P7,841,997.64) for its landholdings covered by the two (2) Transfer
because the records could not be found as her co-counsel, Atty. Ricardo Certificates of Title mentioned above. Should there be a rejection of the
Blancaflor, who originally handled the case for SRRDC and had possession payment tendered, to open, if none has yet been made, a trust account for
of all the records of the case was on indefinite leave and could not be said amount in the name of Sta. Rosa Realty Development Corporation;
contacted. The Board granted counsel’s request and moved the hearing on
April 4, 1991. 3. The Register of Deeds of the Province of Laguna to cancel with dispatch
Transfer Certificate of Title Nos. 84891 and 81949 and new one be issued in
On March 18, 1991, SRRDC submitted a petition to the Board for the the name of the Republic of the Philippines, free from liens and
latter to resolve SRRDC’s petition for exemption from CARP coverage encumbrances;
before any administrative valuation of their landholding could be had
by the Board.
4. The Department of Environment and Natural Resources either through its
Provincial Office in Laguna or the Regional Office, Region IV, to conduct a
On April 4, 1991, the initial DARAB hearing of the case was held and final segregation survey on the lands covered by Transfer Certificate of Title
subsequently, different dates of hearing were set without objection from Nos. 84891 and 81949 so the same can be transferred by the Register of
counsel of SRRDC. During the April 15, 1991 hearing, the subdivision plan Deeds to the name of the Republic of the Philippines;
of subject property at Casile, Cabuyao, Laguna was submitted and marked
as Exhibit "5" for SRRDC. At the hearing on April 23, 1991, the Land Bank 5. The Regional Office of the Department of Agrarian Reform through its
asked for a period of one month to value the land in dispute. Municipal and Provincial Agrarian Reform Office to take immediate
88

possession on the said landholding after Title shall have been transferred to THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
the name of the Republic of the Philippines, and distribute the same to the DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS
immediate issuance of Emancipation Patents to the farmer-beneficiaries as JURISDICTION IN DISREGARDING ECOLOGICAL CONSIDERATIONS AS
determined by the Municipal Agrarian Reform Office of Cabuyao, Laguna. 25 MANDATED BY LAW.

On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing III
the Land Bank of the Philippines (LBP) to open a trust account in favor of SRRDC,
for P5,637,965.55, as valuation for the SRRDC property. THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS
The titles in the name of SRRDC were cancelled and corresponding TCTs were JURISDICTION IN AFFIRMING THE DISTRIBUTION OF THE SRRDC
issued in the name of the Republic of the Philippines on February 11, PROPERTIES TO PRIVATE RESPONDENTS WHO HAVE BEEN
1992,26 after which Certificates of Land Ownership Award (CLOA) were issued JUDICIALLY DECLARED AS SQUATTERS AND THEREFORE ARE NOT
in the name of the farmers-beneficiaries on February 26, 1992.27 QUALIFIED BENEFICIARIES PURSUANT TO THE CENTRAL MINDANAO
UNIVERSITY DECISION OF THIS HONORABLE COURT.
In the meantime, SRRDC had filed with the CA a petition for review of the DARAB’s
decision, docketed as CA-G.R. SP No. 27234. i. The acquisition of the SRRDC properties cannot be valid for
future beneficiaries.
On November 5, 1993, the CA affirmed the decision of DARAB, to wit:
ii. Section 22 of RA 6657 insofar as it expands the coverage of the
WHEREFORE, premises considered, the DARAB decision dated December CARP to ‘landless residents’ is unconstitutional.
19, 1991 is AFFIRMED, without prejudice to petitioner Sta. Rosa Realty
Development Corporation ventilating its case with the Special Agrarian Court IV
on the issue of just compensation.28
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
Hence, SRRDC filed on November 24, 1993, herein petition, docketed as G.R. No. DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS
112526 on the following grounds: JURISDICTION IN HOLDING THAT THE DARAB HAS JURISDICTION TO
PASS UPON THE ISSUE OF WHETHER THE SRRDC PROPERTIES ARE
I SUBJECT TO CARP COVERAGE.29

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF On October 12, 2001, the Court rendered its Decision in G.R. No. 112526 only,
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF ITS setting aside the decision of the CA in CA-G.R. SP No. 27234 and ordering the
JURISDICTION IN RULING THAT THE SRRDC PROPERTIES, DESPITE remand of the case to the DARAB for re-evaluation and determination of the nature of
THE UNDISPUTED FACT OF THEIR NON-AGRICULTURAL the land. The dispositive portion of the Decision reads as follows:
CLASSIFICATION PRIOR TO RA 6657, ARE COVERED BY THE CARP
CONTRARY TO THE NATALIA REALTY DECISION OF THIS IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of
HONORABLE COURT. Appeals in CA-G.R. SP No. 27234.

i. The SRRDC properties have been zoned and approved as In lieu thereof, the Court REMANDS the case to the DARAB for re-
‘PARK’ since 1979. evaluation and determination of the nature of the parcels of land involved to
resolve the issue of its coverage by the Comprehensive Land Reform
ii. The SRRDC properties form part of a watershed area. Program.

II In the meantime, the effects of the CLOAs issued by the DAR to supposed
farmer beneficiaries shall continue to be stayed by the temporary restraining
order issued on December 15, 1993, which shall remain in effect until final
decision on the case.
89

No costs. At the outset, the Court notes that petitioner designated its petition in G.R. No.
112526 as one for review on certiorari of the decision of the CA. In the same breath, it
SO ORDERED.30 likewise averred that it was also being filed as a special civil action for certiorari as
public respondents committed grave abuse of discretion. 36 Petitioner should not have
been allowed, in the first place, to pursue such remedies simultaneously as these are
It is the opinion of the Court in G.R. No. 112526, that the property is part of a mutually exclusive.37
watershed, and that during the hearing at the DARAB, "there was proof that the land
may be excluded from the coverage of the CARP because of its high slopes."31 Thus,
the Court concluded that a remand of the case to the DARAB for re-evaluation of the It is SRRDC’s claim that the CA committed grave abuse of discretion in holding that
issue of coverage is appropriate in order to resolve the true nature of the subject the subject property is agricultural in nature. In support of its contention, it argued,
property.32 among others, that the subject property had already been classified as "park" since
1979 under the Zoning Ordinance of Cabuyao, as approved by the Housing and Land
Use Regulatory Board (HLURB); that it forms part of a watershed; and that the CA
In their Memorandum, Amante, et al. argues that there exist compelling reasons to disregarded ecological considerations.38 SRRDC also claimed that Amante, et al. are
grant the second motion for reconsideration of the assailed decision of the Court, to not qualified beneficiaries.39
wit:
Clearly, these issues are factual in nature, which the Court, as a rule, should not have
2.1 Only QUESTIONS OF LAW are admittedly and undeniably at issue; yet considered in this case. However, there are recognized exceptions, e.g., when the
the Honorable Court reviewed the findings of facts of the Court of Appeals factual inferences of the appellate court are manifestly mistaken; the judgment is
and the DARAB although the case does not fall into any of the well- based on a misapprehension of facts; or the CA manifestly overlooked certain
recognized exceptions to conduct a factual review. Worse, the 12 October relevant and undisputed facts that, if properly considered, would justify a different
2001 Decision assumed facts not proven before any administrative, quasi- legal conclusion.40 The present cases fall under the above exceptions.
judicial or judicial bodies;
Thus, in order to finally set these cases to rest, the Court shall resolve the substantive
2.2 The DARAB and the Court of Appeals already found the land to be matters raised, which in effect comes down to the issue of the validity of the
CARPable; yet the Honorable Court remanded the case to DARAB to re- acquisition of the subject property by the Government under Republic Act (R.A.) No.
evaluate if the land is CARPable; 6657, or the Comprehensive Agrarian Reform Law of 1988 (CARL).

2.3 The Decision did not express clearly and distinctly the facts and the law As noted earlier, the DARAB made its finding regarding the nature of the property in
on which it is based; question, i.e., the parcels of land are agricultural and may be the subject of
compulsory acquisition for distribution to farmer-beneficiaries, thus:
2.4 The Decision renewed the Temporary Restraining Order issued on 15
December 1993, issuance of which is barred by Sec. 55 of R.A. 6657; and Ocular inspections conducted by the Board show that the subject
landholdings have been under the possession and tillage of the DAR
2.5 This Honorable Court denied private respondents’ Motion for identified potential beneficiaries which they inherited from their forebears
Reconsideration although issues raised therein were never passed upon in (workers of the Yulo Estate). They are bonafide residents and registered
the 12 October 2001 Decision or elsewhere.33 voters (DARAB Exhibits "C" and "J") of Barangay Casile, Cabuyao, Laguna.
There is a barangay road leading toward the barangay school and sites and
The DAR and the DARAB, through the Office of the Solicitor General, did not the settlement has a barangay hall, church, elementary school buildings
interpose any objection to the second motion for reconsideration. It also maintained (DARAB Exhibit "Q"), Comelec precincts (DARAB Exhibits "J-1" and J-2"),
that if SRRDC’s claim that the property is watershed is true, then it is the DENR that and other structures extant in progressive communities. The barangay
should exercise control and supervision in the disposition, utilization, management, progressive development agencies, like the DECS, DA, COMELEC, DAR
renewal and conservation of the property.34 and Support Services of Land Bank, DPWH, DTI and the Cooperative
Development Authority have extended support services to the community
(DARAB Exhibits "I", "K" to "K-3", "L", "M", "N", "O", "P" to "P-6"). More
SRRDC meanwhile insists that there are no compelling reasons to give due course to importantly, subject landholdings are suitable for agriculture. Their
the second motion for reconsideration.35 topography is flat to undulating 3-15% slope. (Testimony of Rosalina
Jumaquio, Agricultural Engineer, DAR, TSN, June 21, 1991, DARAB
90

Exhibits "F" and "H"). Though some portions are over 18% slope, 2. Certification dated March 11, 1991 by the Housing and Land Use
nevertheless, clearly visible thereat are fruit-bearing trees, like Regulatory Board that the parcels of land located in Barangay Casile are
coconut, coffee, and pineapple plantations, etc. (see Petitioners within the Municipal Park, based on the municipality’s approved General
Exhibits "A" to "YYY" and DARAB Exhibits "A" to "S", Records). In Land Use Plan ratified by the Housing and Land Use Regulatory Board as
other words, they are already productive and fully developed. per Resolution No. 38-2 dated June 25, 1980;47

... 3. Photocopies of pictures taken by Mr. Ernesto Garcia, Officer-in-Charge of


the Special Project Section of CJ Yulo and Sons, Inc., of portions of
As the landholdings of SRRDC subject of the instant proceedings are Barangay Casile;48
already developed not only as a community but also as an agricultural
farm capable of sustaining daily existence and growth, We find no The Court recognizes the power of a local government to reclassify and convert lands
infirmity in placing said parcels of land under compulsory coverage. through local ordinance, especially if said ordinance is approved by the
They do not belong to the exempt class of lands. The claim that the HLURB.49 Municipal Ordinance No. 110-54 dated November 3, 1979, enacted by the
landholding of SRRDC is a watershed; hence, belonging to the exempt Municipality of Cabuyao, divided the municipality into residential, commercial,
class of lands is literally "throwing punches at the moon" because the industrial, agricultural and institutional districts, and districts and parks for open
DENR certified that "the only declared watershed in Laguna Province spaces.50 It did not convert, however, existing agricultural lands into residential,
and San Pablo City is the Caliraya-Lumot Rivers (Petitioner’s Exhibit commercial, industrial, or institutional. While it classified Barangay Casile into a
"A"). A sensu contrario, the landholdings subject herein are municipal park, as shown in its permitted uses of land map, the ordinance did not
not.41 (Emphasis supplied) provide for the retroactivity of its classification. In Co vs. Intermediate Appellate
Court,51 it was held that an ordinance converting agricultural lands into residential or
The evidence on record supports these findings, to wit: light industrial should be given prospective application only, and should not change
the nature of existing agricultural lands in the area or the legal relationships existing
over such lands. Thus, it was stated:
1. Certification dated January 16, 1989 by the OIC Provincial Environment
and Natural Resources Office of Laguna that the only declared watershed in
the Laguna province and San Pablo City is the Caliraya-Lumot Rivers No. A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does
1570 dated September 1, 1976;42 not disclose any provision converting existing agricultural lands in the
covered area into residential or light industrial. While it declared that after the
passage of the measure, the subject area shall be used only for residential
2. Map prepared by Agricultural Engineer Rosalina H. Jumaquio showing or light industrial purposes, it is not provided therein that it shall have
that: a) the topography of the property covered by TCT No. T-84891 retroactive effect so as to discontinue all rights previously acquired over
topography is flat to undulating with a 5 to 10% slope; (b) it is suitable to lands located within the zone which are neither residential nor light industrial
agricultural crops; and (c) the land is presently planted with diversified in nature. This simply means that, if we apply the general rule, as we
crops;43 must, the ordinance should be given prospective operation only. The
further implication is that it should not change the nature of existing
3. Certification dated August 28, 1989 by APT Felicito Buban of the agricultural lands in the area or the legal relationships existing over
Department of Agriculture of Laguna that, per his ocular inspection, the such lands …52 (Emphasis supplied)
subject property is an agricultural area, and that the inhabitants’ main
occupation is farming;44 Under Section 3 (c) of R.A. No. 6657, agricultural land is defined as land devoted to
agricultural activity and not classified as mineral, forest, residential, commercial or
4. Pictures taken by MARO Belen La Torre of Cabuyao, Laguna, showing industrial land. Section 3 (b) meanwhile defines agricultural activity as the cultivation
that the property is cultivated and inhabited by the farmer-beneficiaries;45 of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or fish,
including the harvesting of such products, and other farm activities, and practices
SRRDC however, insists that the property has already been classified as a "municipal performed by a farmer in conjunction with such farming operations done by persons
park" and beyond the scope of CARP. To prove this, SRRDC submitted the following: whether natural or juridical.

1. Certification dated March 1, 1991 by the Municipality of Cabuyao, Laguna Before Barangay Casile was classified into a municipal park by the local government
that the entire barangay of Casile is delineated as Municipal Park; 46 of Cabuyao, Laguna in November 1979, it was part of a vast property popularly
91

known as the Canlubang Sugar Estate. SRRDC claimed that in May 1979, "the late a 19 to 75% slope,62 was presented by SRRDC only during the proceedings before
Miguel Yulo … allowed the employees of the Yulo group of companies to cultivate a the CA which had no probative value in a petition for review proceedings. The Court
maximum area of one hectare each subject to the condition that they should not plant notes that SRRDC had been given ample time and opportunity by the DARAB to
crops being grown by the Canlubang Sugar Estate, like coconuts and coffee, to avoid prove the grounds for its protest and objection but miserably failed to take advantage
confusion as to ownership of crops."53 The consolidation and subdivision plan of such time and opportunity63 in the DARAB proceedings.
surveyed for SRRDC on March 10-15, 198454 also show that the subject property is
sugar land. Evidently, the subject property is already agricultural at the time the SRRDC also contends that the property is part of a watershed, citing as evidence, the
municipality of Cabuyao enacted the zoning ordinance, and such ordinance should Certification dated June 26, 1991 by the Laguna Lake Development Authority that
not affect the nature of the land. More so since the municipality of Cabuyao did Barangay Casile is part of the watershed area of the Laguna Lake Basin, 64 and the
not even take any step to utilize the property as a park. Final Report for Watershed Area Assessment Study for the Canlubang Estate dated
July 1991 undertaken by the Engineering & Development Corporation of the
SRRDC cites the case of Natalia Realty, Inc. vs. DAR,55 wherein it was ruled that Philippines.65 It must be noted, however, that these pieces of evidence were likewise
lands not devoted to agricultural activity and not classified as mineral or forest by the brought to record only when petitioner filed its petition for review with the CA. The
DENR and its predecessor agencies, and not classified in town plans and zoning DARAB never had the opportunity to assess these pieces of evidence.
ordinances as approved by the HLURB and its preceding competent authorities prior
to the enactment of R.A. No. 6657 on June 15, 1988, are outside the coverage of the The DARAB stated:
CARP. Said ruling, however, finds no application in the present case. As previously
stated, Municipal Ordinance No. 110-54 of the Municipality of Cabuyao did not
provide for any retroactive application nor did it convert existing agricultural lands into Noting the absence of evidence which, in the nature of things, should have
residential, commercial, industrial, or institutional. Consequently, the subject property been submitted by landowner SRRDC and to avoid any claim of deprivation
remains agricultural in nature and therefore within the coverage of the CARP. of its right to prove its claim to just compensation (Uy v. Genato, 57 SCRA
123). We practically directed its counsel in not only one instance, during the
series of hearings conducted, to do so. We even granted continuances to
Only on March 9, 2004, SRRDC filed with the Court a Manifestation pointing out DAR give it enough time to prepare and be ready with the proof and documents.
Order No. (E)4-03-507-309 dated February 17, 2004, exempting from CARP To Our dismay, none was submitted and this constrained Us to take the
coverage two parcels of land owned by SRRDC and covered by TCT Nos. T-85573 failure/refusal of SRRDC to present evidence as a waiver or, at least, an
and T-92014.56 The DAR found that these properties have been re-classified into implied acceptance of the valuation made by the DAR.66
Municipal Parks by the Municipal Ordinance of Cabuyao, Laguna, and are part of the
Kabangaan-Casile watershed, as certified by the DENR.57
The same goes with the CA, which did not have the discretion to consider evidence in
a petition for certiorari or petition for review on certiorari outside than that submitted
The Court notes however that the said DAR Order has absolutely no bearing on these before the DARAB. The CA noted petitioner’s failure to present evidence in behalf of
cases. The herein subject property is covered by TCT Nos. 81949 and 34891, totally its arguments, thus:
different, although adjacent, from the property referred to in said DAR Order.
. . . It must be recalled that petitioner Sta. Rosa Realty itself had asked the
SRRDC also contends that the property has an 18% slope and over and therefore DARAB in a petition dated March 18, 1991 to allow it ‘to adduce evidence in
exempt from acquisition and distribution under Section 10 of R.A. No. 6657. What support of its position that the subject parcels of land are not covered by the
SRRDC opted to ignore is that Section 10, as implemented by DAR Administrative CARP beginning on the scheduled hearing dated April 4, 1991.’ And DARAB
Order No. 13 dated August 30, 1990, also provides that those with 18% slope and obliged as in fact the petitioner commenced to introduce evidence. If
over but already developed for agricultural purposes as of June 15, 1988, may petitioner failed to complete the presentation of evidence to support its claim
be allocated to qualified occupants.58Hence, even assuming that the property has of exemption from CARP coverage, it has only itself to blame for which
an 18% slope and above, since it is already developed for agricultural purposes, then DARAB cannot be accused of not being impartial.67
it cannot be exempt from acquisition and distribution. Moreover, the topography maps
prepared by Agricultural Engineer Rosalina H. Jumaquio show that the property to be
acquired has a 5-10% flat to undulating scope;59 that it is suitable to agricultural Consequently, there is no need to order the remand of the case to the DARAB "for re-
crops;60 and it is in fact already planted with diversified crops. 61 evaluation and determination of the nature of the parcels of land involved." It runs
contrary to orderly administration of justice and would give petitioner undue
opportunity to present evidence in support of its stance, an opportunity it already had
Also, the Certification dated July 1, 1991 by Geodetic Engineer Conrado R. Rigor that during the DARAB proceedings, and which opportunity it regrettably failed to take
the top portion of Barangay Casile has a 0 to 18% slope while the side of the hill has advantage of.
92

More significantly however, it is the DAR Secretary that originally declared the In order to be exempt from coverage, the land must have been classified or
subject property as falling under the coverage of the CARP. proclaimed and actually, directly and exclusively used and found to be necessary for
watershed purposes.68 In this case, at the time the DAR issued the Notices of
Moreover, DAR Administrative Order No. 13, Series of 1990 (Rules and Procedure Coverage up to the time the DARAB rendered its decision on the dispute, the subject
Governing Exemption of Lands from CARP Coverage under Section 10, R.A. No. property is yet to be officially classified or proclaimed as a watershed and has in fact
6657) provides: long been used for agricultural purposes. SRRDC relies on the case of Central
Mindanao University (CMU) vs. DARAB,69 wherein the Court ruled that CMU is in the
best position to determine what property is found necessary for its use. SRRDC
I. LEGAL MANDATE claims that it is in the best position to determine whether its properties are
"necessary" for development as park and watershed area.70
The general policy under CARP is to cover as much lands suitable for
agriculture as possible. However, Section 10, RA 6657 excludes and But SRRDC’s reliance on the CMU case is flawed. In the CMU case, the subject
exempts certain types of lands from the coverage of CARP, to wit: property from the very beginning was not alienable and disposable because
Proclamation No. 476 issued by the late President Carlos P. Garcia already reserved
A. Lands actually, directly and exclusively used and found to be necessary the property for the use of the school. Besides, the subject property in the CMU case
for parks, wildlife, forest reserves, reforestation, fish sanctuaries and was actually, directly and exclusively used and found to be necessary for educational
breeding grounds, watersheds and mangroves, national defense, school purposes.
sites and campuses including experimental farm stations operated by public
or private schools for educational purposes, seeds and seedlings research In the present case, the property is agricultural and was not actually and exclusively
and pilot production centers, church sites and convents appurtenant thereto, used for watershed purposes. As records show, the subject property was first utilized
mosque sites and Islamic centers appurtenant thereof, communal burial for the purposes of the Canlubang Sugar Estate.71 Later, petitioner claimed that the
grounds and cemeteries, penal colonies and penal farms actually worked by occupants were allowed to cultivate the area so long as they do not plant crops being
the inmates, government and private research and quarantine centers; and grown by the Canlubang Sugar Estate in order to avoid confusion as to ownership
thereof.72 Thus, based on its own assertions, it appears that it had benefited from the
... fruits of the land as agricultural land. Now, in a complete turnaround, it is claiming that
the property is part of a watershed.
II. POLICIES
Furthermore, in a belated attempt to prove that the subject property is part of a
In the application of the aforecited provision of law, the following guidelines watershed that must be environmentally protected, SRRDC submitted before the
shall be observed: Court a Final Report dated February 1994 undertaken by the Ecosystems Research
and Development Bureau (ERDB) of the DENR entitled, "Environmental Assessment
of the Casile and Kabanga-an River Watersheds."73 The study, according to SRRDC,
A. For an area in I.A to be exempted from CARP coverage, it must be was made pursuant to a handwritten instruction issued by then President Fidel V.
"actually, directly and exclusively used and found to be necessary" for the Ramos. The study noted that, "the continuing threat of widespread deforestation and
purpose so stated. unwise land use practices have resulted in the deteriorating condition of the
watersheds."74 But the Court also notes the Memorandum for the President dated
... September 1993 by then DENR Secretary Angel C. Alcala that, after a field inspection
conducted by the DENR’s Regional Executive Director and the Provincial and
Community Natural Resource Officers, it was found that:
C. Lands which have been classified or proclaimed, and/or actually directly
and exclusively used and found to be necessary for parks, wildlife, forest
reserves, fish sanctuaries and breeding grounds, and watersheds and ...
mangroves shall be exempted from the coverage of CARP until Congress,
taking into account ecological, developmental and equity considerations, 2. Many bankal trees were found growing in the watershed/CARP areas,
shall have determined by law, the specific limits of public domain, as including some which have been coppiced, and that water conduits for
provided for under Sec. 4(a) of RA 6657, and a reclassification of the said domestic and industrial uses were found installed at the watershed area
areas or portions thereof as alienable and disposable has been approved. claimed by the Yulos. Records further show that in the 1970s, a Private Land
(Emphasis supplied)
93

Timber Permit was issued to Canlubang Sugar Estate thru its marketing SUBJECT: I. PREFATORY STATEMENT
arm, the Sta. Rosa Realty Devpt. Corp.
Pursuant to Section 15, Chapter IV, of the Comprehensive Agrarian Reform
3. Resident farmers denied that they have been cutting bankal trees and Law of 1988, the DAR, in coordination with the Barangay Agrarian Reform
volunteered the information that one of the Estates’ security guards was Committee (BARC), as organized pursuant to RA 6657, shall register all
dismissed for cutting and transporting bankal trees. The trees cut by the agricultural lessees, tenants and farmworkers who are qualified beneficiaries
dismissed security guard were found stacked adjacent to the Canlubang of the CARP. This Administrative Order provides the Implementing Rules
Security Agency’s headquarters.75 and Procedures for the said registration.

Evidently, SRRDC had a hand in the degradation of the area, and now wants to put ...
the entire blame on the farmer-beneficiaries. It is reasonable to conclude that SRRDC
is merely using "ecological considerations" to avert any disposition of the property B. Specific
adverse to it.
1. Identify the actual and potential farmer-beneficiaries of the CARP.
SRRDC also objects to the identification of Amante, et al. as beneficiaries of the
subject property. Suffice it to say that under Section 15 of R.A. No. 6657, the
identification of beneficiaries is a matter involving strictly the administrative In Lercana vs. Jalandoni,76 the Court categorically stated that:
implementation of the CARP, a matter which is exclusively vested in the Secretary of
Agrarian Reform, through its authorized offices. Section 15 reads: … the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP, a matter
SECTION 15. Registration of Beneficiaries. — The DAR in coordination with exclusively cognizable by the Secretary of the Department of Agrarian
the Barangay Agrarian Reform Committee (BARC) as organized in this Act, Reform, and beyond the jurisdiction of the DARAB.77
shall register all agricultural lessees, tenants and farmworkers who are
qualified to be beneficiaries of the CARP. These potential beneficiaries with The farmer-beneficiaries have already been identified in this case. Also, the DAR
the assistance of the BARC and the DAR shall provide the following data: Secretary has already issued Notices of Coverage and Notices of Acquisition
pertaining to the subject property. It behooves the courts to exercise great caution in
(a) names and members of their immediate farm household; substituting its own determination of the issue, unless there is grave abuse of
discretion committed by the administrative agency,78 which in these cases the Court
finds none.
(b) owners or administrators of the lands they work on and the
length of tenurial relationship;
SRRDC questions the constitutionality of Section 22 of R.A. No. 6657, which reads in
part:
(c) location and area of the land they work;
SECTION 22. Qualified Beneficiaries. The lands covered by the CARP shall
(d) crops planted; and be distributed as much as possible to landless residents of the same
barangay, or in the absence thereof, landless residents of the same
(e) their share in the harvest or amount of rental paid or wages municipality in the following order of priority.
received.
(a) agricultural lessees and share tenants;
A copy of the registry or list of all potential CARP beneficiaries in the
barangay shall be posted in the barangay hall, school or other public (b) regular farmworkers;
buildings in the barangay where it shall be open to inspection by the public
at all reasonable hours.
(c) seasonal farmworkers;
Meanwhile, Administrative Order No. 10 (Rules and Procedures Governing the
Registration of Beneficiaries), Series of 1989, provides: (d) other farmworkers;
94

(e) actual tillers or occupants of public lands; constitutionality, and to justify its nullification, there must be a clear and unequivocal
breach of the Constitution, and not one that is doubtful, speculative or
(f) collectives or cooperatives of the above beneficiaries; and argumentative.85 The controversy at hand is principally anchored on the coverage of
the subject property under the CARP, an issue that can be determined without
delving into the constitutionality of Section 22 of R.A. No. 6657. While the
(g) others directly working on the land. identification of Amante, et al. as farmer-beneficiaries is a corollary matter, yet, the
same may be resolved by the DAR.
...
SRRDC questions the DARAB’s jurisdiction to entertain the question of whether the
SRRDC argues that Section 22 "sweepingly declares landless residents as subject property is subject to CARP coverage.
beneficiaries of the CARP (to mean also squatters)," in violation of Article XIII, Section
4 of the Constitution, which aims to benefit only the landless farmers and regular According to SRRDC, such authority is vested with the DAR Secretary who has the
farmworkers.79 exclusive prerogative to resolve matters involving the administrative implementation
of the CARP and agrarian laws and regulations.86
The Court cannot entertain such constitutional challenge. The requirements before a
litigant can challenge the constitutionality of a law are well-delineated, viz.: There is no question that the power to determine whether a property is subject to
CARP coverage lies with the DAR Secretary. Section 50 of R.A. No. 6657 provides
(1) The existence of an actual and appropriate case; that:

(2) A personal and substantial interest of the party raising the constitutional SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested
question; with primary jurisdiction to determine and adjudicate agrarian reform matters
and shall have exclusive original jurisdiction over all matters involving the
(3) The exercise of judicial review is pleaded at the earliest opportunity; implementation of agrarian reform, except those falling under the exclusive
and jurisdiction of the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR).

(4) The constitutional question is the lis mota of the case.80 (Emphasis
supplied) ...

Earliest opportunity means that the question of unconstitutionality of the act in The DAR’s jurisdiction under Section 50 of R.A. No. 6657 is two-fold. The first is
question should have been immediately raised in the proceedings in the court essentially executive and pertains to the enforcement and administration of the laws,
below,81 in this case, the DAR Secretary. It must be pointed out that all controversies carrying them into practical operation and enforcing their due observance, while the
on the implementation of the CARP fall under the jurisdiction of the DAR, even second is judicial and involves the determination of rights and obligations of the
though they raise questions that are also legal or constitutional in nature.82 The parties.87
earliest opportunity to raise a constitutional issue is to raise it in the pleadings before
a competent court that can resolve the same, such that, "if it is not raised in the Pursuant to its judicial mandate of achieving a just, expeditious and inexpensive
pleadings, it cannot be considered at the trial, and, if not considered at the trial, it determination of every action or proceeding before it,88 the DAR adopted the DARAB
cannot be considered on appeal."83 Records show that SRRDC raised such Revised Rules, Rule II (Jurisdiction of the Adjudication Board) of which provides:
constitutional challenge only before this Court despite the fact that it had the
opportunity to do so before the DAR Secretary. The DARAB correctly refused to deal SECTION 1. Primary, Original and Appellate Jurisdiction. – The Agrarian
on this issue as it is the DAR Secretary who, under the law, has the authority to Reform Adjudication Board shall have primary jurisdiction, both original and
determine the beneficiaries of the CARP. This Court will not entertain questions on appellate, to determine and adjudicate all agrarian disputes, cases,
the invalidity of a statute where that issue was not specifically raised, insisted upon, controversies, and matters or incidents involving the implementation of the
and adequately argued84 in the DAR. Comprehensive Agrarian Reform Program under Republic Act No. 6657,
Executive Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as
Likewise, the constitutional question raised by SRRDC is not the very lis mota in the amended by Republic Act No. 6389, Presidential Decree No. 27 and other
present case. Basic is the rule that every law has in its favor the presumption of agrarian laws and their implementing rules and regulations.
95

Specifically, such jurisdiction shall extend over but not be limited to the SECTION 2. Cases Covered. - These Rules shall govern cases falling within
following: the exclusive jurisdiction of the DAR Secretary which shall include the
following:
a) Cases involving the rights and obligations of persons engaged in the
cultivation and use of agricultural land covered by the Comprehensive (a) Classification and identification of landholdings for coverage under
Agrarian Reform Program (CARP) and other agrarian laws; the Comprehensive Agrarian Reform Program (CARP), including
protests or oppositions thereto and petitions for lifting of coverage;
b) Cases involving the valuation of land, and determination and payment of
just compensation, fixing and collection of lease rentals, disturbance (b) Identification, qualification or disqualification of potential farmer-
compensation, amortization payments, and similar disputes concerning the beneficiaries;
functions of the Land Bank;
(c) Subdivision surveys of lands under CARP;
c) Cases involving the annulment or cancellation of orders or decisions of
DAR officials other than the Secretary, lease contracts or deeds of sale or (d) Issuance, recall or cancellation of Certificates of Land Transfer (CLTs)
their amendments under the administration and disposition of the DAR and and CARP Beneficiary Certificates (CBCs) in cases outside the purview of
LBP; Presidential Decree (PD) No. 816, including the issuance, recall or
cancellation of Emancipation Patents (EPs) or Certificates of Land
d) Cases arising from, or connected with membership or representation in Ownership Awards (CLOAs) not yet registered with the Register of Deeds;
compact farms, farmers’ cooperatives and other registered farmers’
associations or organizations, related to land covered by the CARP and (e) Exercise of the right of retention by landowner; . . . (Emphasis supplied)
other agrarian laws;
Thus, the power to determine whether a property is agricultural and subject to CARP
e) Cases involving the sale, alienation, mortgage, foreclosure, pre-emption coverage together with the identification, qualification or disqualification of farmer-
and redemption of agricultural lands under the coverage of the CARP or beneficiaries lies with the DAR Secretary.90
other agrarian laws;
Significantly, the DAR had already determined that the properties are subject to
f) Cases involving the issuance of Certificate of Land Transfer (CLT), expropriation under the CARP and has distributed the same to the farmer-
Certificate of Land Ownership Award (CLOA) and Emancipation Patent (EP) beneficiaries.
and the administrative correction thereof;
Initially, the LBP forwarded the two Compulsory Acquisition Claim Folders (CACF)
g) And such other agrarian cases, disputes, matters or concerns referred to covering the subject properties to the DARAB for summary proceedings for the sole
it by the Secretary of the DAR. purpose of determining just compensation. SRRDC then sent a letter to the LBP
claiming that the subject properties were exempt from CARP coverage and subject of
Provided, however, that matters involving strictly the administrative a pending petition for land conversion. As a consequence, the DARAB asked the
implementation of the CARP and other agrarian laws and regulations, DAR Secretary to first resolve the issues raised by SRRDC before it can proceed with
shall be the exclusive prerogative of and cognizable by the Secretary the land valuation proceedings. In response, the DAR, through the Undersecretary for
of the DAR. (Emphasis supplied) Operations and the Regional Director of Region IV, submitted its report stating that:
(1) the property is subject to compulsory acquisition by virtue of the Notice of
On the other hand, Administrative Order No. 06-00,89 which provides for the Rules of Coverage issued on August 11, 1989, and Notice of Acquisition issued on December
Procedure for Agrarian Law Implementation (ALI) Cases, govern the administrative 12, 1989, and that it was subject to CARP coverage per Section IV D of DAR
function of the DAR. Under said Rules of Procedure, the DAR Secretary has Administrative Order No. 1, Series of 1990; and (2) there was no pending petition for
exclusive jurisdiction over classification and identification of landholdings for coverage land conversion involving the subject property. When SRRDC petitioned the DARAB
under the CARP, including protests or oppositions thereto and petitions for lifting of to resolve the issue of exemption from coverage, it was only then that the DARAB
coverage. Section 2 of the said Rules specifically provides, inter alia, that: took cognizance of said issue.91
96

As the DARAB succinctly pointed out, it was SRRDC that initiated and invoked the ...
DARAB’s jurisdiction to pass upon the question of CARP coverage. As stated by the
DARAB: 4.5.6. Public respondents (DAR/DARAB) are not unmindful of the rule that
matter of jurisdiction may be raised at any stage of the proceeding. But for
4.5.2.2. The ISSUE ON CARP COVERAGE was initiated and incorporated two serious considerations, the applicability thereof in the case at bar should
in said proceeding, at the instance of petitioner itself, by filing a petition not be allowed.
dated March 18, 1991, … Prayed therein were that DARAB:
4.5.6.1. The fact [part (municipal/industrial) and/or watershed] upon which
1. Take cognizance and assume jurisdiction over the question of CARP the jurisdictional issue interchangeably hinges were not established during
coverage of the subject parcels of land; the hearing of the case. No proof was adduced. That the matter of CARP
coverage is strictly administrative implementation of CARP and, therefore,
2. Defer or hold in abeyance the proceedings for administrative valuation of beyond the competence of DARAB, belonging, as it does, to the DAR
the subject properties pending determination of the question of CARP Secretary, was not even alleged, either before DARAB or the Honorable
coverage; Court of Appeals, the numerous petitions/incidents filed notwithstanding. Be
it that as it may, the records of the case show that initially DARAB refused to
take cognizance thereof and, in fact, forwarded the issue of CARP coverage
3. Allow respondent SRRDC to adduce evidence in support of its position to the office of the DAR Secretary. It was only when it was returned to
that the subject parcels of land are not covered by the CARP beginning on DARAB by said office that proceedings thereon commenced pursuant to
the scheduled hearing date of April 4, 1991" (p.3; emphasis and Section 1(g) of Rule II of the DARAB Revised Rules of Procedure.
underscoring supplied).
4.5.6.2. Petitioner is now estopped from assailing the jurisdiction of
Upon persistent request of petitioner SRRDC, it was accommodated by DARAB. First, it expressly acknowledged the same, in fact invoked it,
DARAB and a counsel of SRRDC even took the witness stand. Its lawyers when it filed its petition (Annex "4"); and, second, during the
were always in attendance during the scheduled hearings until it was time scheduled hearings, SRRDC, through its counsel, actively participated,
for SRRDC to present its own evidence. one of its counsel (sic) even testifying. It may not now be allowed to
impugn the jurisdiction of public respondent …92(Emphasis supplied)
4.5.2.3. But, as earlier stated, despite the open session proddings by
DARAB for SRRDC to submit evidence and the rescheduling for, allegedly, In CA-G.R. SP No. 27234, the CA likewise found that it was SRRDC that called upon
they are still collating the evidence, nay, the request that it be allowed to the DARAB to determine the issue and it, in fact, actively participated in the
adduce evidence, none was adduced and this constrained public respondent proceedings before it.93 It was SRRDC’s own act of summoning the DARAB’s
to declare SRRDC as having waived its right to present evidence. And, after authority that cured whatever jurisdictional defect it now raises. It is elementary that
the remaining parties were heard, the hearing was formally terminated. the active participation of a party in a case pending against him before a court or a
quasi-judicial body, is tantamount to a recognition of that court’s or body’s jurisdiction
... and a willingness to abide by the resolution of the case and will bar said party from
later on impugning the court’s or body’s jurisdiction. 94
4.5.3. Needless to state, the jurisdictional objection (CARP coverage),
now being raised herein was not one of the original matters in issue. Moreover, the issue of jurisdiction was raised by SRRDC only before the CA. It was
Principally, DARAB was called upon under Section 16 of Republic Act never presented or discussed before the DARAB for obvious reasons, i.e., it was
No. 6657 to resolve a land valuation case. But SRRDC itself insisted SRRDC itself that invoked the latter’s jurisdiction. As a rule, when a party adopts a
that DARAB should take cognizance thereof in the same land valuation certain theory, and the case is tried and decided upon that theory in the court below,
proceeding. And, SRRDC, through its lawyers, actively participated in he will not be permitted to change his theory on appeal.95 Points of law, theories,
the hearings conducted. issues and arguments not brought to the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing court, as these cannot be raised for
4.5.4. It was only when an adverse decision was rendered by DARAB the first time at such late stage.96 To permit SRRDC to change its theory on appeal
that the jurisdictional issue was raised in the petition for review it filed would not only be unfair to Amante, et al. but would also be offensive to the basic
with the Honorable Court of Appeals. It was also only then that scales of fair play, justice and due process.97
petitioner presented proof/evidence.
97

Finally, the Court notes that then DAR Secretary Benjamin T. Leong issued a Consequently, the decisions of the trial court in the injunction case and the CA in CA-
Memorandum on July 11, 1991, ordering the opening of a trust account in favor of G.R. SP No. 38182 must now be set aside, insofar as it orders Amante, et al. to
SRRDC. In Land Bank of the Philippines vs. Court of Appeals, this Court struck down vacate and/or enjoins them from entering the subject property.
as void DAR Administrative Circular No. 9, Series of 1990, providing for the opening
of trust accounts in lieu of the deposit in cash or in bonds contemplated in Section 16 The Court, however, agrees with the CA that Amante, et al. is not entitled to actual,
(e) of R.A. No. 6657. As a result, the DAR issued Administrative Order No. 2, Series moral and exemplary damages, as well as attorney’s fees. SRRDC’s right of
of 1996, converting trust accounts in the name of landowners into deposit possession over the subject property was predicated on its claim of ownership, and it
accounts.98 Thus, the trust account opened by the LBP per instructions of DAR cannot be sanctioned in exercising its rights or protecting its interests thereon. As was
Secretary Benjamin T. Leong should be converted to a deposit account, to be ruled by the CA, Amante, et al. is merely entitled to nominal damages as a result of
retroactive in application in order to rectify the error committed by the DAR in opening SRRDC’s acts.102
a trust account and to grant the landowners the benefits concomitant to payment in
cash or LBP bonds prior to the ruling of the Court in Land Bank of the Philippines vs.
Court of Appeals. The account shall earn a 12% interest per annum from the time the All is not lost in this case. In its Memorandum dated September 29, 1993, to the DAR
LBP opened a trust account up to the time said account was actually converted into Secretary, the DENR manifested that:
cash and LBP bonds deposit accounts.
. . . the farmers themselves could be tapped to undertake watershed
Given the foregoing conclusions, the petition filed in G.R. No. 118838, which primarily management and protection. This community-based approach in natural
rests on G.R. No. 112526, should be granted. resource management, is in fact, being used in numerous watershed
management projects nationwide. Adopting the same approach in the area
is deemed the best possible solution to the case since it will not prejudice
The judgments of the trial court in the injunction case (Civil Case No. B-2333) and the the CLOAs issued to the farmer-beneficiaries. They should, however, be
CA in CA-G.R. SP No. 38182were premised on SRRDC’s transfer certificates of title required to undertake the necessary reforestation and other watershed
over the subject property. The trial court and the CA cannot be faulted for denying the management/rehabilitation measures in the area.
writ of injunction prayed for by Amante, et al. since at the time the trial court rendered
its decision in the injunction case on January 20, 1992, SRRDC was still the holder of
the titles covering the subject property. The titles in its name were cancelled and In view of the foregoing, we recommend that a watershed management plan for the
corresponding TCTs were issued in the name of the Republic of the Philippines on area espousing the community-based approach be drawn-up jointly by the DAR and
February 11, 1992, and CLOAs were issued to the farmer-beneficiaries on February DENR. . . .103
26, 1992. When Amante, et al., in their motion for reconsideration filed in CA-G.R. SP
No. 38182, brought to the CA’s attention the issuance of the CLOAs, the CA, per If SRRDC sincerely wants to preserve the property for ecological considerations, it
Resolution dated January 19, 1995, reiterated its ruling that "whether or not the can be done regardless of who owns it. After all, we are all stewards of this earth, and
subject property is covered by the Comprehensive Agrarian Reform Law (R.A. No. it rests on all of us to tend to it.
6657) is the subject matter of a separate case, and we cannot interfere with the same
at the present time." The CA further stated that "(O)ur present decision is, therefore, WHEREFORE, the Second Motion for Reconsideration is GRANTED. The Court’s
not intended to preempt any judgment or prejudice the right of any party in the said Decision dated October 12, 2001 in G.R. No. 112526 is SET ASIDE and the Decision
case."99 It must be noted that at that juncture, the DARAB Decision and the CA of the Court of Appeals dated November 5, 1993 in CA-G.R. SP No. 27234 is
decision in CA-G.R. SP No. 27234, finding the subject property covered by the CARP AFFIRMED with MODIFICATION, in that the Land Bank of the Philippines is ordered
Law, is yet to be finally resolved by this Court in G.R. No. 112526and in fact, a to convert the trust account in the name of Sta. Rosa Realty Development
temporary restraining order was issued by the Court on December 15, 1993, Corporation to a deposit account, subject to a 12% interest per annum from the time
enjoining the DARAB from enforcing the effects of the CLOAs. Amante, et al. was the LBP opened a trust account up to the time said account was actually converted
likewise restrained from further clearing the subject property.100 Hence, the decision into cash and LBP bonds deposit accounts. The temporary restraining order issued
of the trial court and the CA denying the writ of injunction was warranted. by the Court on December 15, 1993, is LIFTED.

Nevertheless, considering that the subject property is agricultural and may be The petition filed by Amante, et al. in G.R. No. 118838 is GRANTED in that Sta. Rosa
acquired for distribution to farmer-beneficiaries identified by the DAR under the Realty Development Corporation is hereby ENJOINED from disturbing the peaceful
CARP, the transfer certificates of title issued in the name of the Republic of the possession of the farmer-beneficiaries with CLOAs. The Decision of the Court of
Philippines and the CLOAs issued by the DAR in the names of Amante, et al., 101 are Appeals dated June 28, 1994 in CA-G.R. CV No. 38182 is AFFIRMED insofar as the
valid titles and therefore must be upheld. By virtue thereof, Amante, et al. who award of nominal damages is concerned.
have been issued CLOAs are now the owners of the subject property.
98

The Department of Environment and Natural Resources and the Department of EN BANC
Agrarian Reform, in coordination with the farmer-beneficiaries identified by the DAR,
are URGED to formulate a community-based watershed plan for the management
and rehabilitation of Barangay Casile.
G.R. No. 127876 December 17, 1999
SO ORDERED.
ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN
REFORM, SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR
FOR REGION IV, MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU,
BATANGAS and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, respondents.

PUNO, J.:

This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner
and the validity of the acquisition of these haciendas by the government under
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988.

Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three
haciendas, namely, Haciendas Palico, Banilad and Caylaway, all located in the
Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024 hectares in area and is
registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by
Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is
1,050 hectares in area, registered under TCT No. 924 and covered by Tax
Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in
area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.

The events of this case occurred during the incumbency of then President Corazon C.
Aquino. In February 1986, President Aquino issued Proclamation No. 3 promulgating
a Provisional Constitution. As head of the provisional government, the President
exercised legislative power "until a legislature is elected and convened under a new
Constitution." 1 In the exercise of this legislative power, the President signed on July
22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform
Program and Executive Order No. 229 providing the mechanisms necessary to
initially implement the program.

On July 27, 1987, the Congress of the Philippines formally convened and took over
legislative power from the President. 2 This

Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law
(CARL) of 1988. The Act was signed by the President on June 10, 1988 and took
effect on June 15, 1988.
99

Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were
voluntary offer to sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. subject to immediate acquisition and distribution by the government under the CARL;
Haciendas Palico and Banilad were later placed under compulsory acquisition by that based on the DAR's valuation criteria, the government was offering
respondent DAR in accordance with the CARL. compensation of P3.4 million for 333.0800 hectares; that whether this offer was to be
accepted or rejected, petitioner was to inform the Bureau of Land Acquisition and
Hacienda Palico Distribution (BLAD) of the DAR; that in case of petitioner's rejection or failure to reply
within thirty days, respondent DAR shall conduct summary administrative
proceedings with notice to petitioner to determine just compensation for the land; that
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian if petitioner accepts respondent DAR's offer, or upon deposit of the compensation
Reform Officer (MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to with an accessible bank if it rejects the same, the DAR shall take immediate
Parties" to petitioner. The Invitation was addressed to "Jaime Pimentel, Hda. possession of the land. 11
Administrator, Hda. Palico." 3 Therein, the MARO invited petitioner to a conference on
October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR
investigation of Hacienda Palico, which was "scheduled for compulsory acquisition Almost two years later, on September 26, 1991, the DAR Regional Director sent to
this year under the Comprehensive Agrarian Reform Program." 4 the LBP Land Valuation Manager three (3) separate Memoranda entitled "Request to
Open Trust Account." Each Memoranda requested that a trust account representing
the valuation of three portions of Hacienda Palico be opened in favor of the petitioner
On October 25, 1989, the MARO completed three (3) Investigation Reports after in view of the latter's rejection of its offered value. 12
investigation and ocular inspection of the Hacienda. In the first Report, the MARO
found that 270 hectares under Tax Declaration Nos. 465, 466, 468 and 470 were "flat
to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for
sugarcane. 5 In the second Report, the MARO identified as "flat to undulating" conversion of Haciendas Palico and Banilad from agricultural to non-agricultural lands
approximately 339 hectares under Tax Declaration No. 0234 which also had several under the provisions of the CARL. 13 On July 14, 1993, petitioner sent a letter to the
actual occupants and tillers of sugarcane; 6 while in the third Report, the MARO found DAR Regional Director reiterating its request for conversion of the two haciendas. 14
approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with
33 actual occupants and tillers also of sugarcane. 7 Despite petitioner's application for conversion, respondent DAR proceeded with the
acquisition of the two Haciendas. The LBP trust accounts as compensation for
On October 27, 1989, a "Summary Investigation Report" was submitted and signed Hacienda Palico were replaced by respondent DAR with cash and LBP bonds. 15 On
jointly by the MARO, representatives of the Barangay Agrarian Reform Committee October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent
(BARC) and Land Bank of the Philippines (LBP), and by the Provincial Agrarian DAR registered Certificate of Land Ownership Award (CLOA) No. 6654. On October
Reform Officer (PARO). The Report recommended that 333.0800 hectares of 30, 1993, CLOA's were distributed to farmer beneficiaries. 16
Hacienda Palico be subject to compulsory acquisition at a value of
P6,807,622.20. 8 The following day, October 28, 1989, two (2) more Summary Hacienda Banilad
Investigation Reports were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be placed under On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu,
compulsory acquisition at a compensation of P8,109,739.00 and P2,188,195.47, Batangas, sent a notice to petitioner addressed as follows:
respectively. 9
Mr. Jaime Pimentel
On December 12, 1989, respondent DAR through then Department Secretary Miriam
D. Santiago sent a "Notice of Acquisition" to petitioner. The Notice was addressed as
follows: Hacienda Administrator

Roxas y Cia, Limited Hacienda Banilad

Soriano Bldg., Plaza Cervantes Nasugbu, Batangas 17

Manila, Metro Manila. 10 The MARO informed Pimentel that Hacienda Banilad was subject to
compulsory acquisition under the CARL; that should petitioner wish to avail
100

of the other schemes such as Voluntary Offer to Sell or Voluntary Land Account" was sent on November 18, 1991 over 723.4130 hectares of said
Transfer, respondent DAR was willing to provide assistance thereto. 18 Hacienda. 28

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and
inviting the latter to attend a conference on September 21, 1989 at the MARO Office P21,234,468.78 in cash and LBP bonds had been earmarked as compensation for
in Nasugbu to discuss the results of the MARO's investigation over Hacienda petitioner's land in Hacienda Banilad. 29
Banilad. 19
On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and
On September 21, 1989, the same day the conference was held, the MARO Banilad.
submitted two (2) Reports. In his first Report, he found that approximately 709
hectares of land under Tax Declaration Nos. 0237 and 0236 were "flat to undulating Hacienda Caylaway
(0-8% slope)." On this area were discovered 162 actual occupants and tillers of
sugarcane. 20 In the second Report, it was found that approximately 235 hectares
under Tax Declaration No. 0390 were "flat to undulating," on which were 92 actual Hacienda Caylaway was voluntarily offered for sale to the government on May 6,
occupants and tillers of sugarcane. 21 1988 before the effectivity of the CARL. The Hacienda has a total area of 867.4571
hectares and is covered by four (4) titles — TCT Nos. T-44662, T-44663, T-44664
and T-44665. On January 12, 1989, respondent DAR, through the Regional Director
The results of these Reports were discussed at the conference. Present in the for Region IV, sent to petitioner two (2) separate Resolutions accepting petitioner's
conference were representatives of the prospective farmer beneficiaries, the BARC, voluntary offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664 and T-
the LBP, and Jaime Pimentel on behalf of the landowner. 22 After the meeting, on the 44663. 30 The Resolutions were addressed to:
same day, September 21, 1989, a Summary Investigation Report was submitted
jointly by the MARO, representatives of the BARC, LBP, and the PARO. They
recommended that after ocular inspection of the property, 234.6498 hectares under Roxas & Company, Inc.
Tax Declaration No. 0390 be subject to compulsory acquisition and distribution by
CLOA. 23 The following day, September 22, 1989, a second Summary Investigation 7th Flr. Cacho-Gonzales Bldg.
was submitted by the same officers. They recommended that 737.2590 hectares
under Tax Declaration Nos. 0236 and 0237 be likewise placed under compulsory Aguirre, Legaspi Village
acquisition for distribution. 24

Makati, M. M 31
On December 12, 1989, respondent DAR, through the Department Secretary, sent to
petitioner two (2) separate "Notices of Acquisition" over Hacienda Banilad. These
Notices were sent on the same day as the Notice of Acquisition over Hacienda Palico. On September 4, 1990, the DAR Regional Director issued two separate Memoranda
Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda Banilad to the LBP Regional Manager requesting for the valuation of the land under TCT Nos.
were addressed to: T-44664 and T-44663. 32 On the same day, respondent DAR, through the Regional
Director, sent to petitioner a "Notice of Acquisition" over 241.6777 hectares under
TCT No. T-44664 and 533.8180 hectares under TCT No. T-44663. 33 Like the
Roxas y Cia. Limited Resolutions of Acceptance, the Notice of Acquisition was addressed to petitioner at
its office in Makati, Metro Manila.
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas,
Makati, Metro Manila. 25 sent a letter to the Secretary of respondent DAR withdrawing its VOS of Hacienda
Caylaway. The Sangguniang Bayan of Nasugbu, Batangas allegedly authorized the
Respondent DAR offered petitioner compensation of P15,108,995.52 for reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a
729.4190 hectares and P4,428,496.00 for 234.6498 hectares. 26 result, petitioner informed respondent DAR that it was applying for conversion of
Hacienda Caylaway from agricultural to other
uses. 34
On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation
Manager a "Request to Open Trust Account" in petitioner's name as compensation for
234.6493 hectares of Hacienda Banilad. 27 A second "Request to Open Trust
101

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner reform, hence, this question should be submitted to the Office of the Secretary of
that a reclassification of the land would not exempt it from agrarian reform. Agrarian Reform for determination. 38
Respondent Secretary also denied petitioner's withdrawal of the VOS on the ground
that withdrawal could only be based on specific grounds such as unsuitability of the On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No.
soil for agriculture, or if the slope of the land is over 18 degrees and that the land is 32484. It questioned the expropriation of its properties under the CARL and the denial
undeveloped. 35 of due process in the acquisition of its landholdings.

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, Meanwhile, the petition for conversion of the three haciendas was denied by the
petitioner filed its application for conversion of both Haciendas Palico and MARO on November 8, 1993.
Banilad. 36 On July 14, 1993, petitioner, through its President, Eduardo Roxas,
reiterated its request to withdraw the VOS over Hacienda Caylaway in light of the
following: Petitioner's petition was dismissed by the Court of Appeals on April 28,
1994. 39 Petitioner moved for reconsideration but the motion was denied on January
17, 1997 by respondent court. 40
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge,
Department of Agriculture, Region 4, 4th Floor, ATI (BA) Bldg.,
Diliman, Quezon City dated March 1, 1993 stating that the lands Hence, this recourse. Petitioner assigns the following errors:
subject of referenced titles "are not feasible and economically
sound for further agricultural development. A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER'S CAUSE OF ACTION IS
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, PREMATURE FOR FAILURE TO EXHAUST ADMINISTRATIVE
Batangas approving the Zoning Ordinance reclassifying areas REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE
covered by the referenced titles to non-agricultural which was RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED
enacted after extensive consultation with government agencies, BY SAID ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN,
including [the Department of Agrarian Reform], and the requisite SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY
public hearings. COURSE OF LAW — ALL OF WHICH ARE EXCEPTIONS TO
THE SAID DOCTRINE.
3) Resolution No. 106 of the Sangguniang Panlalawigan of
Batangas dated March 8, 1993 approving the Zoning Ordinance B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
enacted by the Municipality of Nasugbu. HOLDING THAT PETITIONER'S LANDHOLDINGS ARE SUBJECT
TO COVERAGE UNDER THE COMPREHENSIVE AGRARIAN
REFORM LAW, IN VIEW OF THE UNDISPUTED FACT THAT
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia PETITIONER'S LANDHOLDINGS HAVE BEEN CONVERTED TO
of the Municipal Planning & Development, Coordinator and NON-AGRICULTURAL USES BY PRESIDENTIAL
Deputized Zoning Administrator addressed to Mrs. Alicia P. Logarta PROCLAMATION NO. 1520 WHICH DECLARED THE
advising that the Municipality of Nasugbu, Batangas has no MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE,
objection to the conversion of the lands subject of referenced titles AND THE ZONING ORDINANCE OF THE MUNICIPALITY OF
to non-agricultural. 37 NASUGBU RE-CLASSIFYING CERTAIN PORTIONS OF
PETITIONER'S LANDHOLDINGS AS NON-AGRICULTURAL,
On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with BOTH OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE
respondent DAR Adjudication Board (DARAB) praying for the cancellation of the SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST
CLOA's issued by respondent DAR in the name of several persons. Petitioner alleged ENTITLE PETITIONER TO APPLY FOR CONVERSION AS
that the Municipality of Nasugbu, where the haciendas are located, had been CONCEDED BY RESPONDENT DAR.
declared a tourist zone, that the land is not suitable for agricultural production, and
that the Sangguniang Bayan of Nasugbu had reclassified the land to non-agricultural. C. RESPONDENT COURT OF APPEALS GRAVELY ERRED
WHEN IT FAILED TO DECLARE THE PROCEEDINGS BEFORE
In a Resolution dated October 14, 1993, respondent DARAB held that the case RESPONDENT DAR VOID FOR FAILURE TO OBSERVE DUE
involved the prejudicial question of whether the property was subject to agrarian PROCESS, CONSIDERING THAT RESPONDENTS BLATANTLY
DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF
102

PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN 1988. 43 Before this may be awarded to a farmer beneficiary, the land must first be
FAILING TO GIVE DUE NOTICE TO THE PETITIONER AND TO acquired by the State from the landowner and ownership transferred to the former.
PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE The transfer of possession and ownership of the land to the government are
ACQUIRED. conditioned upon the receipt by the landowner of the corresponding payment or
deposit by the DAR of the compensation with an accessible bank. Until then, title
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED remains with the landowner. 44 There was no receipt by petitioner of any
WHEN IT FAILED TO RECOGNIZE THAT PETITIONER WAS compensation for any of the lands acquired by the government.
BRAZENLY AND ILLEGALLY DEPRIVED OF ITS PROPERTY
WITHOUT JUST COMPENSATION, CONSIDERING THAT The kind of compensation to be paid the landowner is also specific. The law provides
PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE that the deposit must be made only in "cash" or "LBP bonds." 45 Respondent DAR's
IT WAS UNCEREMONIOUSLY STRIPPED OF ITS opening of trust account deposits in petitioner' s name with the Land Bank of the
LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO Philippines does not constitute payment under the law. Trust account deposits are not
ALLEGED FARMER BENEFICIARIES, IN VIOLATION OF R.A. cash or LBP bonds. The replacement of the trust account with cash or LBP bonds did
6657. 41 not ipso facto cure the lack of compensation; for essentially, the determination of this
compensation was marred by lack of due process. In fact, in the entire acquisition
The assigned errors involve three (3) principal issues: (1) whether this Court can take proceedings, respondent DAR disregarded the basic requirements of administrative
cognizance of this petition despite petitioner's failure to exhaust administrative due process. Under these circumstances, the issuance of the CLOA's to farmer
remedies; (2) whether the acquisition proceedings over the three haciendas were beneficiaries necessitated immediate judicial action on the part of the petitioner.
valid and in accordance with law; and (3) assuming the haciendas may be reclassified
from agricultural to non-agricultural, whether this court has the power to rule on this II. The Validity of the Acquisition Proceedings Over the Haciendas.
issue.
Petitioner's allegation of lack of due process goes into the validity of the acquisition
I. Exhaustion of Administrative Remedies. proceedings themselves. Before we rule on this matter, however, there is need to lay
down the procedure in the acquisition of private lands under the provisions of the law.
In its first assigned error, petitioner claims that respondent Court of Appeals gravely
erred in finding that petitioner failed to exhaust administrative remedies. As a general A. Modes of Acquisition of Land under R. A. 6657
rule, before a party may be allowed to invoke the jurisdiction of the courts of justice,
he is expected to have exhausted all means of administrative redress. This is not Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL),
absolute, however. There are instances when judicial action may be resorted to provides for two (2) modes of acquisition of private land: compulsory and voluntary.
immediately. Among these exceptions are: (1) when the question raised is purely The procedure for the compulsory acquisition of private lands is set forth in Section
legal; (2) when the administrative body is in estoppel; (3) when the act complained of 16 of R.A. 6657, viz:
is patently illegal; (4) when there is urgent need for judicial intervention; (5) when the
respondent acted in disregard of due process; (6) when the respondent is a
department secretary whose acts, as an alter ego of the President, bear the implied Sec. 16. Procedure for Acquisition of Private Lands. — For
or assumed approval of the latter; (7) when irreparable damage will be suffered; (8) purposes of acquisition of private lands, the following procedures
when there is no other plain, speedy and adequate remedy; (9) when strong public shall be followed:
interest is involved; (10) when the subject of the controversy is private land; and (11)
in quo warranto proceedings. 42 a). After having identified the land, the
landowners and the beneficiaries, the DAR shall
Petitioner rightly sought immediate redress in the courts. There was a violation of its send its notice to acquire the land to the owners
rights and to require it to exhaust administrative remedies before the DAR itself was thereof, by personal delivery or registered mail,
not a plain, speedy and adequate remedy. and post the same in a conspicuous place in the
municipal building and barangay hall of the place
where the property is located. Said notice shall
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer contain the offer of the DAR to pay a
beneficiaries over portions of petitioner's land without just compensation to petitioner. corresponding value in accordance with the
A Certificate of Land Ownership Award (CLOA) is evidence of ownership of land by a valuation set forth in Sections 17, 18, and other
beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law of pertinent provisions hereof.
103

b) Within thirty (30) days from the date of receipt Acquisition, the landowner, his administrator or representative shall inform the DAR of
of written notice by personal delivery or his acceptance or rejection of the offer. If the landowner accepts, he executes and
registered mail, the landowner, his administrator delivers a deed of transfer in favor of the government and surrenders the certificate of
or representative shall inform the DAR of his title. Within thirty days from the execution of the deed of transfer, the Land Bank of
acceptance or rejection of the offer. the Philippines (LBP) pays the owner the purchase price. If the landowner rejects the
DAR's offer or fails to make a reply, the DAR conducts summary administrative
c) If the landowner accepts the offer of the DAR, proceedings to determine just compensation for the land. The landowner, the LBP
the LBP shall pay the landowner the purchase representative and other interested parties may submit evidence on just
price of the land within thirty (30) days after he compensation within fifteen days from notice. Within thirty days from submission, the
executes and delivers a deed of transfer in favor DAR shall decide the case and inform the owner of its decision and the amount of just
of the Government and surrenders the Certificate compensation. Upon receipt by the owner of the corresponding payment, or, in case
of Title and other muniments of title. of rejection or lack of response from the latter, the DAR shall deposit the
compensation in cash or in LBP bonds with an accessible bank. The DAR shall
immediately take possession of the land and cause the issuance of a transfer
d) In case of rejection or failure to reply, the DAR certificate of title in the name of the Republic of the Philippines. The land shall then be
shall conduct summary administrative redistributed to the farmer beneficiaries. Any party may question the decision of the
proceedings to determine the compensation for DAR in the regular courts for final determination of just compensation.
the land requiring the landowner, the LBP and
other interested parties to submit evidence as to
the just compensation for the land, within fifteen The DAR has made compulsory acquisition the priority mode of the land acquisition to
(15) days from receipt of the notice. After the hasten the implementation of the Comprehensive Agrarian Reform Program
expiration of the above period, the matter is (CARP). 46 Under Section 16 of the CARL, the first step in compulsory acquisition is
deemed submitted for decision. The DAR shall the identification of the land, the landowners and the beneficiaries. However, the law
decide the case within thirty (30) days after it is is silent on how the identification process must be made. To fill in this gap, the DAR
submitted for decision. issued on July 26, 1989 Administrative Order No. 12, Series or 1989, which set the
operating procedure in the identification of such lands. The procedure is as follows:
e) Upon receipt by the landowner of the
corresponding payment, or, in case of rejection or II. OPERATING PROCEDURE
no response from the landowner, upon the
deposit with an accessible bank designated by A. The Municipal Agrarian Reform Officer, with the assistance of
the DAR of the compensation in cash or in LBP the pertinent Barangay Agrarian Reform Committee (BARC), shall:
bonds in accordance with this Act, the DAR shall
take immediate possession of the land and shall 1. Update the masterlist of all agricultural lands
request the proper Register of Deeds to issue a covered under the CARP in his area of
Transfer Certificate of Title (TCT) in the name of responsibility. The masterlist shall include such
the Republic of the Philippines. The DAR shall information as required under the attached CARP
thereafter proceed with the redistribution of the Masterlist Form which shall include the name of
land to the qualified beneficiaries. the landowner, landholding area, TCT/OCT
number, and tax declaration number.
f) Any party who disagrees with the decision may
bring the matter to the court of proper jurisdiction 2. Prepare a Compulsory Acquisition Case Folder
for final determination of just compensation. (CACF) for each title (OCT/TCT) or landholding
covered under Phase I and II of the CARP except
In the compulsory acquisition of private lands, the landholding, the landowners and those for which the landowners have already filed
the farmer beneficiaries must first be identified. After identification, the DAR shall applications to avail of other modes of land
send a Notice of Acquisition to the landowner, by personal delivery or registered mail, acquisition. A case folder shall contain the
and post it in a conspicuous place in the municipal building and barangay hall of the following duly accomplished forms:
place where the property is located. Within thirty days from receipt of the Notice of
104

a) CARP CA Form 1 — MARO 1. Ensure that the individual case folders are
Investigation Report forwarded to him by his MAROs.

b) CARP CA Form 2 — 2. Immediately upon receipt of a case folder,


Summary Investigation Report compute the valuation of the land in accordance
of Findings and Evaluation with A.O. No. 6, Series of 1988. 47 The valuation
worksheet and the related CACF valuation forms
c) CARP CA Form 3 — shall be duly certified correct by the PARO and
Applicant's Information Sheet all the personnel who participated in the
accomplishment of these forms.
d) CARP CA Form 4 —
Beneficiaries Undertaking 3. In all cases, the PARO may validate the report
of the MARO through ocular inspection and
verification of the property. This ocular inspection
e) CARP CA Form 5 — and verification shall be mandatory when the
Transmittal Report to the computed value exceeds = 500,000 per estate.
PARO
4. Upon determination of the valuation, forward
The MARO/BARC shall certify that all information the case folder, together with the duly
contained in the above-mentioned forms have accomplished valuation forms and his
been examined and verified by him and that the recommendations, to the Central Office. The LBP
same are true and correct. representative and the MARO concerned shall be
furnished a copy each of his report.
3. Send a Notice of Coverage and a letter of
invitation to a conference/meeting to the C. DAR Central Office, specifically through the
landowner covered by the Compulsory Case Bureau of Land Acquisition and Distribution
Acquisition Folder. Invitations to the said (BLAD), shall:
conference/meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC
representative(s), the Land Bank of the 1. Within three days from receipt of the case
Philippines (LBP) representative, and other folder from the PARO, review, evaluate and
interested parties to discuss the inputs to the determine the final land valuation of the property
valuation of the property. He shall discuss the covered by the case folder. A summary review
MARO/BARC investigation report and solicit the and evaluation report shall be prepared and duly
views, objection, agreements or suggestions of certified by the BLAD Director and the personnel
the participants thereon. The landowner shall directly participating in the review and final
also be asked to indicate his retention area. The valuation.
minutes of the meeting shall be signed by all
participants in the conference and shall form an 2. Prepare, for the signature of the Secretary or
integral part of the CACF. her duly authorized representative, a Notice of
Acquisition (CARP CA Form 8) for the subject
4. Submit all completed case folders to the property. Serve the Notice to the landowner
Provincial Agrarian Reform Officer (PARO). personally or through registered mail within three
days from its approval. The Notice shall include,
among others, the area subject of compulsory
B. The PARO shall: acquisition, and the amount of just compensation
offered by DAR.
105

3. Should the landowner accept the DAR's For a valid implementation of the CAR program, two notices are required: (1) the
offered value, the BLAD shall prepare and submit Notice of Coverage and letter of invitation to a preliminary conference sent to the
to the Secretary for approval the Order of landowner, the representatives of the BARC, LBP, farmer beneficiaries and other
Acquisition. However, in case of rejection or non- interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of
reply, the DAR Adjudication Board (DARAB) shall Acquisition sent to the landowner under Section 16 of the CARL.
conduct a summary administrative hearing to
determine just compensation, in accordance with The importance of the first notice, i.e., the Notice of Coverage and the letter of
the procedures provided under Administrative invitation to the conference, and its actual conduct cannot be understated. They are
Order No. 13, Series of 1989. Immediately upon steps designed to comply with the requirements of administrative due process. The
receipt of the DARAB's decision on just implementation of the CARL is an exercise of the State's police power and the power
compensation, the BLAD shall prepare and of eminent domain. To the extent that the CARL prescribes retention limits to the
submit to the Secretary for approval the required landowners, there is an exercise of police power for the regulation of private property
Order of Acquisition. in accordance with the Constitution. 50 But where, to carry out such regulation, the
owners are deprived of lands they own in excess of the maximum area allowed, there
4. Upon the landowner's receipt of payment, in is also a taking under the power of eminent domain. The taking contemplated is not a
case of acceptance, or upon deposit of payment mere limitation of the use of the land. What is required is the surrender of the title to
in the designated bank, in case of rejection or and physical possession of the said excess and all beneficial rights accruing to the
non-response, the Secretary shall immediately owner in favor of the farmer beneficiary. 51 The Bill of Rights provides that "[n]o
direct the pertinent Register of Deeds to issue the person shall be deprived of life, liberty or property without due process of law." 52 The
corresponding Transfer Certificate of Title (TCT) CARL was not intended to take away property without due process of law. 53 The
in the name of the Republic of the Philippines. exercise of the power of eminent domain requires that due process be observed in
Once the property is transferred, the DAR, the taking of private property.
through the PARO, shall take possession of the
land for redistribution to qualified beneficiaries. DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung,
was amended in 1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian No. 1, Series of 1993. The Notice of Coverage and letter of invitation to the
Reform Officer (MARO) keep an updated master list of all agricultural lands under the conference meeting were expanded and amplified in said amendments.
CARP in his area of responsibility containing all the required information. The MARO
prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of
CARP. The MARO then sends the landowner a "Notice of Coverage" and a "letter of Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition
invitation" to a "conference/meeting" over the land covered by the CACF. He also Pursuant to R.A. 6657," requires that:
sends invitations to the prospective farmer-beneficiaries the representatives of the
Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines
(LBP) and other interested parties to discuss the inputs to the valuation of the B. MARO
property and solicit views, suggestions, objections or agreements of the parties. At
the meeting, the landowner is asked to indicate his retention area. 1. Receives the duly
accomplished CARP Form
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer Nos. 1 & 1.1 including
(PARO) who shall complete the valuation of the land. Ocular inspection and supporting documents.
verification of the property by the PARO shall be mandatory when the computed
value of the estate exceeds P500,000.00. Upon determination of the valuation, the 2. Gathers basic ownership
PARO shall forward all papers together with his recommendation to the Central Office documents listed under 1.a or
of the DAR. The DAR Central Office, specifically, the Bureau of Land Acquisition and 1.b above and prepares
Distribution (BLAD), shall review, evaluate and determine the final land valuation of corresponding VOCF/CACF by
the property. The BLAD shall prepare, on the signature of the Secretary or his duly landowner/landholding.
authorized representative, a Notice of Acquisition for the subject property. 48 From this
point, the provisions of Section 16 of R.A. 6657 then apply. 49 3. Notifies/invites the
landowner and representatives
106

of the LBP, DENR, BARC and found


prospective beneficiaries of the qualified,
schedule of ocular inspection cause the
of the property at least one signing of the
week in advance. respective
Application
4. MARO/LAND BANK FIELD OFFICE/BARC to Purchase
and Farmer's
Undertaking
a) Identify (CARP Form
the land and No. 4).
landowner,
and
determine d) Complete
the suitability the Field
for Investigation
agriculture Report
and based on the
productivity result of the
of the land ocular
and jointly inspection/in
prepare Field vestigation of
Investigation the property
Report and
(CARP Form documents
No. 2), submitted.
including the See to it that
Land Use Field
Map of the Investigation
property. Report is
duly
accomplishe
b) Interview d and signed
applicants by all
and assist concerned.
them in the
preparation
of the 5. MARO
Application
For Potential a) Assists
CARP the DENR
Beneficiary Survey Party
(CARP Form in the
No. 3). conduct of a
boundary/
c) Screen subdivision
prospective survey
farmer- delineating
beneficiaries areas
and for those covered by
107

OLT, following
retention, matters:
subject of
VOS, CA (by R
phases, if e
possible), s
infrastructure u
s, etc., l
whichever is t
applicable. o
f
b) Sends F
Notice of i
Coverage e
(CARP Form l
No. 5) to d
landowner I
concerned or n
his duly v
authorized e
representativ s
e inviting him t
for a i
conference. g
a
c) Sends t
Invitation i
Letter (CARP o
Form No. 6) n
for a
conference/p I
ublic hearing n
to p
prospective u
farmer- t
beneficiaries, s
landowner, t
representativ o
es of BARC, v
LBP, DENR, a
DA, NGO's, l
farmers' u
organizations a
and other t
interested i
parties to o
discuss the n
108

I d) Prepares
s Summary of
s Minutes of
u the
e conference/p
s ublic hearing
r to be guided
a by CARP
i Form No. 7.
s
e e) Forwards
d the
completed
C VOCF/CACF
o to the
m Provincial
m Agrarian
e Reform
n Office
t (PARO)
s using CARP
/ Form No. 8
r (Transmittal
e Memo to
c PARO).
o
m xxx xxx xxx
m
e
n DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell
d (VOS) and Compulsory Acquisition (CA) transactions involving lands enumerated
a under Section 7 of the CARL. 54 In both VOS and CA. transactions, the MARO
t prepares the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory
i Acquisition Case Folder (CACF), as the case may be, over a particular landholding.
o The MARO notifies the landowner as well as representatives of the LBP, BARC and
n prospective beneficiaries of the date of the ocular inspection of the property at least
s one week before the scheduled date and invites them to attend the same. The
b MARO, LBP or BARC conducts the ocular inspection and investigation by identifying
y the land and landowner, determining the suitability of the land for agriculture and
a productivity, interviewing and screening prospective farmer beneficiaries. Based on its
l investigation, the MARO, LBP or BARC prepares the Field Investigation Report which
l shall be signed by all parties concerned. In addition to the field investigation, a
p boundary or subdivision survey of the land may also be conducted by a Survey Party
a of the Department of Environment and Natural Resources (DENR) to be assisted by
r the MARO. 55 This survey shall delineate the areas covered by Operation Land
t Transfer (OLT), areas retained by the landowner, areas with infrastructure, and the
i areas subject to VOS and CA. After the survey and field investigation, the MARO
. sends a "Notice of Coverage" to the landowner or his duly authorized representative
inviting him to a conference or public hearing with the farmer beneficiaries,
109

representatives of the BARC, LBP, DENR, Department of Agriculture (DA), non- to avail of his right of retention;
government organizations, farmer's organizations and other interested parties. At the
public hearing, the parties shall discuss the results of the field investigation, issues and at the same time invites him
that may be raised in relation thereto, inputs to the valuation of the subject
landholding, and other comments and recommendations by all parties concerned.
The Minutes of the conference/public hearing shall form part of the VOCF or CACF to join the field investigation to
which files shall be forwarded by the MARO to the PARO. The PARO reviews,
evaluates and validates the Field Investigation Report and other documents in the be conducted on his property
VOCF/CACF. He then forwards the records to the RARO for another review.
which should be scheduled at
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993.
DAR A.O. No. 1, Series of 1993 provided, among others, that: least two weeks in advance of

IV. OPERATING PROCEDURES: said notice.

Steps Responsible Activity Forms/ A copy of said Notice shall CARP

Agency/Unit Document be posted for at least one Form No. 17

(requirements) week on the bulletin board of

A. Identification and the municipal and barangay

Documentation halls where the property is

xxx xxx xxx located. LGU office concerned

5 DARMO Issue Notice of Coverage CARP notifies DAR about compliance

to LO by personal delivery Form No. 2 with posting requirements thru

with proof of service, or return indorsement on CARP

registered mail with return Form No. 17.

card, informing him that his 6 DARMO Send notice to the LBP, CARP

property is now under CARP BARC, DENR representatives Form No. 3

coverage and for LO to select and prospective ARBs of the schedule of the field investigation

his retention area, if he desires to be conducted on the subject


110

property. on the scheduled date, the field

7 DARMO With the participation of CARP investigation shall also be conducted,

BARC the LO, representatives of Form No. 4 after which the duly accomplished

LBP the LBP, BARC, DENR Land Use Part I of CARP Form No. 4 shall

DENR and prospective ARBs, Map be forwarded to the LBP

Local Office conducts the investigation on representative for validation. If he agrees

subject property to identify to the ocular inspection report of DAR,

the landholding, determines he signs the FIR (Part I) and

its suitability and productivity; accomplishes Part II thereof.

and jointly prepares the Field In the event that there is a

Investigation Report (FIR) difference or variance between

and Land Use Map. However, the findings of the DAR and the

the field investigation shall LBP as to the propriety of

proceed even if the LO, the covering the land under CARP,

representatives of the DENR and whether in whole or in part, on

prospective ARBs are not available the issue of suitability to agriculture,

provided, they were given due degree of development or slope,

notice of the time and date of and on issues affecting idle lands,

investigation to be conducted. the conflict shall be resolved by

Similarly, if the LBP representative a composite team of DAR, LBP,

is not available or could not come DENR and DA which shall jointly
111

conduct further investigation and barangay halls where

thereon. The team shall submit its the property is located.

report of findings which shall be LGU office concerned CARP

binding to both DAR and LBP, notifies DAR about Form No. 17

pursuant to Joint Memorandum compliance with posting

Circular of the DAR, LBP, DENR requirement thru return

and DA dated 27 January 1992. endorsement on CARP

8 DARMO Screen prospective ARBs Form No. 17.

BARC and causes the signing of CARP B. Land Survey

the Application of Purchase Form No. 5 10 DARMO Conducts perimeter or Perimeter

and Farmer's Undertaking And/or segregation survey or

(APFU). DENR delineating areas covered Segregation

9 DARMO Furnishes a copy of the CARP Local Office by OLT, "uncarpable Survey Plan

duly accomplished FIR to Form No. 4 areas such as 18% slope

the landowner by personal and above, unproductive/

delivery with proof of unsuitable to agriculture,

service or registered mail retention, infrastructure.

will return card and posts In case of segregation or

a copy thereof for at least subdivision survey, the

one week on the bulletin plan shall be approved

board of the municipal by DENR-LMS.


112

C. Review and Completion be conducted where he and representatives of the concerned sectors of society may
attend to discuss the results of the field investigation, the land valuation and other
of Documents pertinent matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage
also informs the landowner that a field investigation of his landholding shall be
conducted where he and the other representatives may be present.
11. DARMO Forward VOCF/CACF CARP
B. The Compulsory Acquisition of Haciendas Palico and Banilad
to DARPO. Form No. 6
In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano,
xxx xxx xxx. sent a letter of invitation entitled "Invitation to Parties" dated September 29, 1989 to
petitioner corporation, through Jaime Pimentel, the administrator of Hacienda
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the Palico. 57 The invitation was received on the same day it was sent as indicated by a
number of government agencies involved in the identification and delineation of the signature and the date received at the bottom left corner of said invitation. With
land subject to acquisition. 56 This time, the Notice of Coverage is sent to the regard to Hacienda Banilad, respondent DAR claims that Jaime Pimentel,
landowner before the conduct of the field investigation and the sending must comply administrator also of Hacienda Banilad, was notified and sent an invitation to the
with specific requirements. Representatives of the DAR Municipal Office (DARMO) conference. Pimentel actually attended the conference on September 21, 1989 and
must send the Notice of Coverage to the landowner by "personal delivery with proof signed the Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes
of service, or by registered mail with return card," informing him that his property is was also signed by the representatives of the BARC, the LBP and farmer
under CARP coverage and that if he desires to avail of his right of retention, he may beneficiaries. 59 No letter of invitation was sent or conference meeting held with
choose which area he shall retain. The Notice of Coverage shall also invite the respect to Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to
landowner to attend the field investigation to be scheduled at least two weeks from respondent DAR. 60
notice. The field investigation is for the purpose of identifying the landholding and
determining its suitability for agriculture and its productivity. A copy of the Notice of When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent
Coverage shall be posted for at least one week on the bulletin board of the municipal to the various parties the Notice of Coverage and invitation to the conference, DAR
and barangay halls where the property is located. The date of the field investigation A.O. No. 12, Series of 1989 was already in effect more than a month earlier. The
shall also be sent by the DAR Municipal Office to representatives of the LBP, BARC, Operating Procedure in DAR Administrative Order No. 12 does not specify how
DENR and prospective farmer beneficiaries. The field investigation shall be notices or letters of invitation shall be sent to the landowner, the representatives of
conducted on the date set with the participation of the landowner and the various the BARC, the LBP, the farmer beneficiaries and other interested parties. The
representatives. If the landowner and other representatives are absent, the field procedure in the sending of these notices is important to comply with the requisites of
investigation shall proceed, provided they were duly notified thereof. Should there be due process especially when the owner, as in this case, is a juridical entity. Petitioner
a variance between the findings of the DAR and the LBP as to whether the land be is a domestic
placed under agrarian reform, the land's suitability to agriculture, the degree or corporation, 61 and therefore, has a personality separate and distinct from its
development of the slope, etc., the conflict shall be resolved by a composite team of shareholders, officers and employees.
the DAR, LBP, DENR and DA which shall jointly conduct further investigation. The
team's findings shall be binding on both DAR and LBP. After the field investigation,
the DAR Municipal Office shall prepare the Field Investigation Report and Land Use The Notice of Acquisition in Section 16 of the CARL is required to be sent to the
Map, a copy of which shall be furnished the landowner "by personal delivery with landowner by "personal delivery or registered mail." Whether the landowner be a
proof of service or registered mail with return card." Another copy of the Report and natural or juridical person to whose address the Notice may be sent by personal
Map shall likewise be posted for at least one week in the municipal or barangay halls delivery or registered mail, the law does not distinguish. The DAR Administrative
where the property is located. Orders also do not distinguish. In the proceedings before the DAR, the distinction
between natural and juridical persons in the sending of notices may be found in the
Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of
Clearly then, the notice requirements under the CARL are not confined to the Notice pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised
of Acquisition set forth in Section 16 of the law. They also include the Notice of Rules of Procedure. Notices and pleadings are served on private domestic
Coverage first laid down in DAR A.O. No. 12, Series of 1989 and subsequently corporations or partnerships in the following manner:
amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993.
This Notice of Coverage does not merely notify the landowner that his property shall
be placed under CARP and that he is entitled to exercise his retention right; it also Sec. 6. Service upon Private Domestic Corporation or Partnership.
notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing, shall — If the defendant is a corporation organized under the laws of the
113

Philippines or a partnership duly registered, service may be made Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the
on the president, manager, secretary, cashier, agent, or any of its notices and letters of invitation were validly served on petitioner through him, there is
directors or partners. no showing that Pimentel himself was duly authorized to attend the conference
meeting with the MARO, BARC and LBP representatives and farmer beneficiaries for
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 purposes of compulsory acquisition of petitioner's landholdings. Even respondent
provides: DAR's evidence does not indicate this authority. On the contrary, petitioner claims
that it had no knowledge of the letter-invitation, hence, could not have given Pimentel
the authority to bind it to whatever matters were discussed or agreed upon by the
Sec. 13. Service upon private domestic corporation or partnership. parties at the preliminary conference or public hearing. Notably, one year after
— If the defendant is a corporation organized under the laws of the Pimentel was informed of the preliminary conference, DAR A.O. No. 9, Series of 1990
Philippines or a partnership duly registered, service may be made was issued and this required that the Notice of Coverage must be sent "to the
on the president, manager, secretary, cashier, agent, or any of its landowner concerned or his duly authorized representative." 69
directors.
Assuming further that petitioner was duly notified of the CARP coverage of its
Summonses, pleadings and notices in cases against a private domestic corporation haciendas, the areas found actually subject to CARP were not properly identified
before the DARAB and the regular courts are served on the president, manager, before they were taken over by respondent DAR. Respondents insist that the lands
secretary, cashier, agent or any of its directors. These persons are those through were identified because they are all registered property and the technical description
whom the private domestic corporation or partnership is capable of action. 62 in their respective titles specifies their metes and bounds. Respondents admit at the
same time, however, that not all areas in the haciendas were placed under the
Jaime Pimentel is not the president, manager, secretary, cashier or director of comprehensive agrarian reform program invariably by reason of elevation or
petitioner corporation. Is he, as administrator of the two Haciendas, considered an character or use of the land. 70
agent of the corporation?
The acquisition of the landholdings did not cover the entire expanse of the two
The purpose of all rules for service of process on a corporation is to make it haciendas, but only portions thereof. Hacienda Palico has an area of 1,024 hectares
reasonably certain that the corporation will receive prompt and proper notice in an and only 688.7576 hectares were targetted for acquisition. Hacienda Banilad has an
action against it. 63 Service must be made on a representative so integrated with the area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The
corporation as to make it a priori supposable that he will realize his responsibilities haciendas are not entirely agricultural lands. In fact, the various tax declarations over
and know what he should do with any legal papers served on him, 64 and bring home the haciendas describe the landholdings as "sugarland," and "forest, sugarland,
to the corporation notice of the filing of the action. 65 Petitioner's evidence does not pasture land, horticulture and woodland." 71
show the official duties of Jaime Pimentel as administrator of petitioner's haciendas.
The evidence does not indicate whether Pimentel's duties is so integrated with the Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically
corporation that he would immediately realize his responsibilities and know what he requires that the land subject to land reform be first identified. The two haciendas in
should do with any legal papers served on him. At the time the notices were sent and the instant case cover vast tracts of land. Before Notices of Acquisition were sent to
the preliminary conference conducted, petitioner's principal place of business was petitioner, however, the exact areas of the landholdings were not properly segregated
listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes, and delineated. Upon receipt of this notice, therefore, petitioner corporation had no
Manila," 66 and "7th Flr. Cacho-Gonzales Bldg., 101 Aguirre St., Makati, Metro idea which portions of its estate were subject to compulsory acquisition, which
Manila." 67 Pimentel did not hold office at the principal place of business of petitioner. portions it could rightfully retain, whether these retained portions were compact or
Neither did he exercise his functions in Plaza Cervantes, Manila nor in Cacho- contiguous, and which portions were excluded from CARP coverage. Even
Gonzales Bldg., Makati, Metro Manila. He performed his official functions and actually respondent DAR's evidence does not show that petitioner, through its duly authorized
resided in the haciendas in Nasugbu, Batangas, a place over two hundred kilometers representative, was notified of any ocular inspection and investigation that was to be
away from Metro Manila. conducted by respondent DAR. Neither is there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those portions to be
Curiously, respondent DAR had information of the address of petitioner's principal acquired compulsorily. The right of retention and how this right is exercised, is
place of business. The Notices of Acquisition over Haciendas Palico and Banilad guaranteed in Section 6 of the CARL, viz:
were addressed to petitioner at its offices in Manila and Makati. These Notices were
sent barely three to four months after Pimentel was notified of the preliminary Sec. 6. Retention Limits. — . . . .
conference. 68Why respondent DAR chose to notify Pimentel instead of the officers of
the corporation was not explained by the said respondent.
114

The right to choose the area to be retained, which shall be compact Sec. 9. Voluntary Offer to Sell. — The government shall purchase
or contiguous, shall pertain to the landowner; Provided, however, all agricultural lands it deems productive and suitable to farmer
That in case the area selected for retention by the landowner is cultivation voluntarily offered for sale to it at a valuation determined
tenanted, the tenant shall have the option to choose whether to in accordance with Section 6. Such transaction shall be exempt
remain therein or be a beneficiary in the same or another from the payment of capital gains tax and other taxes and fees.
agricultural land with similar or comparable features. In case the
tenant chooses to remain in the retained area, he shall be Executive Order 229 does not contain the procedure for the identification of private
considered a leaseholder and shall lose his right to be a beneficiary land as set forth in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely
under this Act. In case the tenant chooses to be a beneficiary in reiterates the procedure of acquisition in Section 16, R.A. 6657. In other words, the
another agricultural land, he loses his right as a leaseholder to the E.O. is silent as to the procedure for the identification of the land, the notice of
land retained by the landowner. The tenant must exercise this coverage and the preliminary conference with the landowner, representatives of the
option within a period of one (1) year from the time the landowner BARC, the LBP and farmer beneficiaries. Does this mean that these requirements
manifests his choice of the area for retention. may be dispensed with regard to VOS filed before June 15, 1988? The answer is no.

Under the law, a landowner may retain not more than five hectares out of the total First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land,
area of his agricultural land subject to CARP. The right to choose the area to be landowner and beneficiaries of the land subject to agrarian reform be identified before
retained, which shall be compact or contiguous, pertains to the landowner. If the area the notice of acquisition should be issued. 74 Hacienda Caylaway was voluntarily
chosen for retention is tenanted, the tenant shall have the option to choose whether offered for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is
to remain on the portion or be a beneficiary in the same or another agricultural land covered by four (4) titles. In two separate Resolutions both dated January 12, 1989,
with similar or comparable features. respondent DAR, through the Regional Director, formally accepted the VOS over the
two of these four
C. The Voluntary Acquisition of Hacienda Caylaway titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only
648.8544 hectares thereof fell within the coverage of R.A. 6657. 76 Petitioner claims it
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the does not know where these portions are located.
subject of a Voluntary Offer to Sell (VOS). The VOS in the instant case was made on
May 6, 1988, 72 before the effectivity of R.A. 6657 on June 15, 1988. VOS Respondent DAR, on the other hand, avers that surveys on the land covered by the
transactions were first governed by DAR Administrative Order No. 19, series of four titles were conducted in 1989, and that petitioner, as landowner, was not denied
1989, 73 and under this order, all VOS filed before June 15, 1988 shall be heard and participation therein, The results of the survey and the land valuation summary report,
processed in accordance with the procedure provided for in Executive Order No. 229, however, do not indicate whether notices to attend the same were actually sent to
thus: and received by petitioner or its duly authorized representative. 77 To reiterate,
Executive Order No. 229 does not lay down the operating procedure, much less the
III. All VOS transactions which are now pending before the DAR notice requirements, before the VOS is accepted by respondent DAR. Notice to the
and for which no payment has been made shall be subject to the landowner, however, cannot be dispensed with. It is part of administrative due
notice and hearing requirements provided in Administrative Order process and is an essential requisite to enable the landowner himself to exercise, at
No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection the very least, his right of retention guaranteed under the CARL.
A, paragraph 3.
III. The Conversion of the three Haciendas.
All VOS filed before 15 June 1988, the date of effectivity of the
CARL, shall be heard and processed in accordance with the It is petitioner's claim that the three haciendas are not subject to agrarian reform
procedure provided for in Executive Order No. 229. because they have been declared for tourism, not agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring
xxx xxx xxx. the municipality of Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including
the subject haciendas, were allegedly reclassified as non-agricultural 13 years before
the effectivity of R. A. No. 6657. 79 In 1993, the Regional Director for Region IV of the
Sec. 9 of E.O. 229 provides: Department of Agriculture certified that the haciendas are not feasible and sound for
agricultural development. 80 On March 20, 1992, pursuant to Proclamation No. 1520,
the Sangguniang Bayan of Nasugbu, Batangas adopted Resolution No. 19
115

reclassifying certain areas of Nasugbu as non-agricultural. 81 This Resolution pursuant to Section 4 (j) of Executive Order No.
approved Municipal Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance 129-A, Series of 1987.
of Nasugbu 82 which zoning ordinance was based on a Land Use Plan for Planning
Areas for New Development allegedly prepared by the University of the B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests
Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by the in the DAR, exclusive authority to approve or
Sangguniang Panlalawigan of Batangas on March 8, 1993. 84 disapprove applications for conversion of
agricultural lands for residential, commercial,
Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in industrial and other land uses.
1991 when it approved conversion of 1,827 hectares in Nasugbu into a tourist area
known as the Batulao Resort Complex, and 13.52 hectares in Barangay Caylaway as C. Sec. 65 of R.A. No. 6657, otherwise known as
within the potential tourist belt. 85 Petitioner present evidence before us that these the Comprehensive Agrarian Reform Law of
areas are adjacent to the haciendas subject of this petition, hence, the haciendas 1988, likewise empowers the DAR to authorize
should likewise be converted. Petitioner urges this Court to take cognizance of the under certain conditions, the conversion of
conversion proceedings and rule accordingly. 6 agricultural lands.

We do not agree. Respondent DAR's failure to observe due process in the acquisition D. Sec. 4 of Memorandum Circular No. 54,
of petitioner's landholdings does not ipso facto give this Court the power to adjudicate Series of 1993 of the Office of the President,
over petitioner's application for conversion of its haciendas from agricultural to non- provides that "action on applications for land use
agricultural. The agency charged with the mandate of approving or disapproving conversion on individual landholdings shall
applications for conversion is the DAR. remain as the responsibility of the DAR, which
shall utilize as its primary reference, documents
At the time petitioner filed its application for conversion, the Rules of Procedure on the comprehensive land use plans and
governing the processing and approval of applications for land use conversion was accompanying ordinances passed upon and
the DAR A.O. No. 2, Series of 1990. Under this A.O., the application for conversion is approved by the local government units
filed with the MARO where the property is located. The MARO reviews the application concerned, together with the National Land Use
and its supporting documents and conducts field investigation and ocular inspection Policy, pursuant to R.A. No. 6657 and E.O. No.
of the property. The findings of the MARO are subject to review and evaluation by the 129-A. 87
Provincial Agrarian Reform Officer (PARO). The PARO may conduct further field
investigation and submit a supplemental report together with his recommendation to Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990
the Regional Agrarian Reform Officer (RARO) who shall review the same. For lands entitled "Revised Rules and Regulations Governing Conversion of Private Agricultural
less than five hectares, the RARO shall approve or disapprove applications for Lands and Non-Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled
conversion. For lands exceeding five hectares, the RARO shall evaluate the PARO "Rules of Procedure Governing the Processing and Approval of Applications for Land
Report and forward the records and his report to the Undersecretary for Legal Affairs. Use Conversion." These A.O.'s and other implementing guidelines, including
Applications over areas exceeding fifty hectares are approved or disapproved by the Presidential issuances and national policies related to land use conversion have been
Secretary of Agrarian Reform. consolidated in DAR A.O. No. 07, Series of 1997. Under this recent issuance, the
guiding principle in land use conversion is:
The DAR's mandate over applications for conversion was first laid down in Section 4
(j) and Section 5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the to preserve prime agricultural lands for food production while, at the
CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the same time, recognizing the need of the other sectors of society
President. The DAR's jurisdiction over applications for conversion is provided as (housing, industry and commerce) for land, when coinciding with
follows: the objectives of the Comprehensive Agrarian Reform Law to
promote social justice, industrialization and the optimum use of land
A. The Department of Agrarian Reform (DAR) is as a national resource for public welfare. 88
mandated to "approve or disapprove applications
for conversion, restructuring or readjustment of "Land Use" refers to the manner of utilization of land, including its allocation,
agricultural lands into non-agricultural uses," development and management. "Land Use Conversion" refers to the act or process of
changing the current use of a piece of agricultural land into some other use as
116

approved by the DAR. 89 The conversion of agricultural land to uses other than IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings
agricultural requires field investigation and conferences with the occupants of the over the three haciendas are nullified for respondent DAR's failure to observe due
land. They involve factual findings and highly technical matters within the special process therein. In accordance with the guidelines set forth in this decision and the
training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with applicable administrative procedure, the case is hereby remanded to respondent DAR
specificity how the DAR must go about its task. This time, the field investigation is not for proper acquisition proceedings and determination of petitioner's application for
conducted by the MARO but by a special task force, known as the Center for Land conversion.
Use Policy Planning and Implementation (CLUPPI-DAR Central Office). The
procedure is that once an application for conversion is filed, the CLUPPI prepares the SO ORDERED.
Notice of Posting. The MARO only posts the notice and thereafter issues a certificate
to the fact of posting. The CLUPPI conducts the field investigation and dialogues with
the applicants and the farmer beneficiaries to ascertain the information necessary for Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima, Buena, Gonzaga-
the processing of the application. The Chairman of the CLUPPI deliberates on the Reyes and De Leon, Jr., JJ., concur.
merits of the investigation report and recommends the appropriate action. This
recommendation is transmitted to the Regional Director, thru the Undersecretary, or Melo, J., please see concurring and dissenting opinion.
Secretary of Agrarian Reform. Applications involving more than fifty hectares are
approved or disapproved by the Secretary. The procedure does not end with the Ynares-Santiago, J., concurring and dissenting opinion.
Secretary, however. The Order provides that the decision of the Secretary may be
appealed to the Office of the President or the Court of Appeals, as the case may
be, viz: Kapunan, J., I join in the concurring and dissenting opinion of Justice C. Y. Santiago.

Appeal from the decision of the Undersecretary shall be made to Quisumbing, J., I join the in the concurring and dissenting opinion of J. Santiago.
the Secretary, and from the Secretary to the Office of the President
or the Court of Appeals as the case may be. The mode of Pardo, J., I join the concurring and dissenting opinion of J. Santiago.
appeal/motion for reconsideration, and the appeal fee, from
Undersecretary to the Office of the Secretary shall be the same as
that of the Regional Director to the Office of the Secretary. 90

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto
itself authority to resolve a controversy the jurisdiction over which is initially lodged
with an administrative body of special competence. 91Respondent DAR is in a better
position to resolve petitioner's application for conversion, being primarily the agency
possessing the necessary expertise on the matter. The power to determine whether
Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from
the coverage of the CARL lies with the DAR, not with this Court.

Finally, we stress that the failure of respondent DAR to comply with the requisites of
due process in the acquisition proceedings does not give this Court the power to
nullify the CLOA's already issued to the farmer beneficiaries. To assume the power is
to short-circuit the administrative process, which has yet to run its regular course.
Respondent DAR must be given the chance to correct its procedural lapses in the
acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to 177 farmer
beneficiaries in 1993. 92 Since then until the present, these farmers have been
cultivating their lands. 93 It goes against the basic precepts of justice, fairness and
equity to deprive these people, through no fault of their own, of the land they till.
Anyhow, the farmer beneficiaries hold the property in trust for the rightful owner of the
land.

THIRD DIVISION
117

G.R. No. 170346 March 12, 2007 On October 23, 1998, a Decision was rendered by the DARAB Provincial Adjudicator
dismissing private respondents’ complaint and upholding the validity of the
HEIRS OF NICOLAS JUGALBOT, Represented by LEONILA B. Emancipation Patent. Private respondents’ motion for reconsideration was denied.9
JUGALBOT, Petitioners,
vs. On appeal, the DARAB Central Office affirmed the Provincial Adjudicator’s decision
COURT OF APPEALS and HEIRS OF VIRGINIA A. ROA, Represented by LOLITA on the sole ground that private respondents’ right to contest the validity of Nicolas
R. GOROSPE, Administratrix, Respondents. Jugalbot’s title was barred by prescription. It held that an action to invalidate a
certificate of title on the ground of fraud prescribes after the expiration of one year
DECISION from the decree of registration.10

YNARES-SANTIAGO, J.: On November 10, 2003, the DARAB denied private respondents’ motion for
reconsideration,11 hence they filed a petition for review before the Court of Appeals
which was granted. The appellate court reversed the Decision and Resolution of the
Petitioners, Heirs of Nicolas Jugalbot, represented by their attorney-in-fact Leonila DARAB Central Office on four grounds: (1) the absence of a tenancy relationship; (2)
Jugalbot, assail the Decision1 of the Court of Appeals dated October 19, 2005 in CA- lack of notice to Virginia Roa by the DAR; (3) the area of the property which was less
G.R. SP No. 81823 where the petitioners’ title to the disputed property, as evidenced than one hectare and deemed swampy, rainfed and kangkong-producing; and (4) the
by Transfer Certificate of Title (TCT) No. E-103, was cancelled and the previous title, classification of the subject property as residential, which is outside the coverage of
TCT No. T-11543, was reinstated in the name of Virginia A. Roa. The appellate court Presidential Decree No. 27.
reversed the Decision2 and Resolution3 of the Department of Agrarian Reform
Adjudication Board (DARAB) Central Office in DARAB Case No. 7966, affirming the
Decision4 of the Provincial Adjudicator and the Order5 denying the motion for Hence, this petition for review on certiorari under Rule 45.
reconsideration in DARAB Case No. X (06-1358) filed in Misamis Oriental, for
Cancellation of TCT No. E-103, Recovery of Possession and Damages. The sole issue for determination is whether a tenancy relationship exists between
petitioners Heirs of Nicolas Jugalbot, and private respondents, Heirs of Virginia A.
On September 28, 1997, an Emancipation Patent (EP) was issued to Nicolas Roa, under Presidential Decree No. 27. Simply stated, are petitioners de jure tenants
Jugalbot based on the latter’s claim that he was the tenant of Lot 2180-C of the of private respondents?
Subdivision plan (LRC) TSD-10465, subject property of the case at bar, with an area
of 6,229 square meters, located at Barangay Lapasan, Cagayan de Oro City. The As clearly laid down in Qua v. Court of Appeals12 and subsequently in Benavidez v.
subject property was registered in the name of Virginia A. Roa under Transfer Court of Appeals,13 the doctrine is well-settled that the allegation that an agricultural
Certificate of Title (TCT) No. T-11543, the same being issued on April 1, 1970 in the tenant tilled the land in question does not automatically make the case an agrarian
name of "Virginia A. Roa married to Pedro N. Roa." The property was originally dispute. It is necessary to first establish the existence of a tenancy relationship
registered in the name of Marcelino Cabili from whom Virginia A. Roa purchased the between the party litigants. The following essential requisites must concur in order to
same sometime in 1966.6 establish a tenancy relationship: (a) the parties are the landowner and the tenant; (b)
the subject matter is agricultural land; (c) there is consent; (d) the purpose is
Nicolas Jugalbot alleged that he was a tenant of the property continuously since the agricultural production; (e) there is personal cultivation by the tenant; and (f) there is a
1950s. On a Certification dated January 8, 1988 and issued by Department of sharing of harvests between the parties.14
Agrarian Reform (DAR) Team Leader Eduardo Maandig, the subject property was
declared to be tenanted as of October 21, 1972 and primarily devoted to rice and Valencia v. Court of Appeals15 further affirms the doctrine that a tenancy relationship
corn. On March 1, 1988, the Emancipation Patent was registered with the Register of cannot be presumed. Claims that one is a tenant do not automatically give rise to
Deeds and Nicolas Jugalbot was issued TCT No. E-103.7 security of tenure. The elements of tenancy must first be proved in order to entitle the
claimant to security of tenure. There must be evidence to prove the allegation that an
On August 10, 1998, the heirs of Virginia A. Roa, herein private respondents, filed agricultural tenant tilled the land in question. Hence, a perusal of the records and
before the DARAB Provincial Office of Misamis Oriental a Complaint for Cancellation documents is in order to determine whether there is substantial evidence to prove the
of Title (TCT No. E-103), Recovery of Possession and Damages against Nicolas allegation that a tenancy relationship does exist between petitioner and private
Jugalbot, docketed as DARAB Case No. X (06-1358).8 respondents. The principal factor in determining whether a tenancy relationship exists
is intent.16
118

Tenancy is not a purely factual relationship dependent on what the alleged tenant Virginia Roa, the fact that when the title over the land in question was issued, Virginia
does upon the land. It is also a legal relationship, as ruled in Isidro v. Court of Roa was already married to Pedro N. Roa as evidenced by the registration in the
Appeals.17 The intent of the parties, the understanding when the farmer is installed, name of "Virginia A. Roa married to Pedro N. Roa," does not suffice to establish the
and their written agreements, provided these are complied with and are not contrary conjugal nature of the property.
to law, are even more important.18
In addition, the defective notice sent to Pedro N. Roa was followed by a DAR
Petitioners allege that they are bona fide tenants of private respondents under certification signed by team leader Eduardo Maandig on January 8, 1988 stating that
Presidential Decree No. 27. Private respondents deny this, citing inter alia, that the subject property was tenanted as of October 21, 1972 and primarily devoted to
Virginia A. Roa was not given a notice of coverage of the property subject matter of rice and corn despite the fact that there was no ocular inspection or any on-site fact-
this case; that Virginia A. Roa and the private respondents did not have any tenant on finding investigation and report to verify the truth of the allegations of Nicolas Jugalbot
the same property; that the property allegedly covered by Presidential Decree No. 27 that he was a tenant of the property. The absence of such ocular inspection or on-site
was residential land; that the lot was paraphernal property of Virginia A. Roa; and the fact-finding investigation and report likewise deprives Virginia A. Roa of her right to
landholding was less than seven (7) hectares. property through the denial of due process.

The petition is devoid of merit. By analogy, Roxas & Co., Inc. v. Court of Appeals23 applies to the case at bar since
there was likewise a violation of due process in the implementation of the
The petitioners are not de jure tenants of private respondents under Presidential Comprehensive Agrarian Reform Law when the petitioner was not notified of any
Decree No. 27 due to the absence of the essential requisites that establish a tenancy ocular inspection and investigation to be conducted by the DAR before acquisition of
relationship between them. the property was to be undertaken. Neither was there proof that petitioner was given
the opportunity to at least choose and identify its retention area in those portions to be
acquired.24 Both in the Comprehensive Agrarian Reform Law and Presidential Decree
Firstly, the taking of subject property was done in violation of constitutional due No. 27, the right of retention and how this right is exercised, is guaranteed by law.
process. The Court of Appeals was correct in pointing out that Virginia A. Roa was
denied due process because the DAR failed to send notice of the impending land
reform coverage to the proper party. The records show that notices were erroneously Since land acquisition under either Presidential Decree No. 27 and the
addressed and sent in the name of Pedro N. Roa who was not the owner, hence, not Comprehensive Agrarian Reform Law govern the extraordinary method of
the proper party in the instant case. The ownership of the property, as can be gleaned expropriating private property, the law must be strictly construed. Faithful compliance
from the records, pertains to Virginia A. Roa. Notice should have been therefore with legal provisions, especially those which relate to the procedure for acquisition of
served on her, and not Pedro N. Roa. expropriated lands should therefore be observed. In the instant case, no proper notice
was given to Virginia A. Roa by the DAR. Neither did the DAR conduct an ocular
inspection and investigation. Hence, any act committed by the DAR or any of its
Spouses Estonina v. Court of Appeals19 held that the presumption under civil law that agencies that results from its failure to comply with the proper procedure for
all property of the marriage belongs to the conjugal partnership applies only when expropriation of land is a violation of constitutional due process and should be
there is proof that the property was acquired during the marriage. Otherwise stated, deemed arbitrary, capricious, whimsical and tainted with grave abuse of discretion.
proof of acquisition during the marriage is a condition sine qua non for the operation
of the presumption in favor of the conjugal partnership.20 In Spouses Estonina,
petitioners were unable to present any proof that the property in question was Secondly, there is no concrete evidence on record sufficient to establish that Nicolas
acquired during the marriage of Santiago and Consuelo Garcia. The fact that when Jugalbot or the petitioners personally cultivated the property under question or that
the title over the land in question was issued, Santiago Garcia was already married to there was sharing of harvests, except for their self-serving statements. Clearly, there
Consuelo as evidenced by the registration in the name of "Santiago Garcia married to is no showing that Nicolas Jugalbot or any of his farm household cultivated the land in
Consuelo Gaza," does not suffice to establish the conjugal nature of the property. 21 question. No proof was presented except for their self-serving statements that they
were tenants of Virginia A. Roa. Independent evidence, aside from their self-serving
statements, is needed to prove personal cultivation, sharing of harvests, or consent of
In the instant case, the Court of Appeals correctly held that the phrase "married to" the landowner, and establish a tenancy relationship.
appearing in certificates of title is no proof that the properties were acquired during
the spouses’ coverture and are merely descriptive of the marital status of the person
indicated therein. The clear import from the certificate of title is that Virginia is the Furthermore, in the findings of fact of the Court of Appeals, it was undisputed that
owner of the property, the same having been registered in her name alone, and being Nicolas Jugalbot was a soldier in the United States Army from June 15, 1946 to April
"married to Pedro N. Roa" was merely descriptive of her civil status. 22 Since no proof 27, 194925 and upon retirement, migrated to the United States and returned to the
was adduced that the property was acquired during the marriage of Pedro and Philippines sometime in 1998.26 It was established that Jugalbot’s wife Miguela and
119

daughter Lilia P. Jugalbot are residents of 17623 Grayland Avenue, Artesia, Without the essential elements of consent and sharing, no tenancy relationship
California, U.S.A., where Nicolas Jugalbot spent his retirement. 27 Thus, the DAR, in can exist between the petitioner and the private respondents. (Underscoring
particular its team leader Eduardo Maandig, haphazardly issued a certification dated supplied)32
January 8, 1988 that the subject property was tenanted as of October 21, 1972 by
Nicolas Jugalbot and primarily devoted to rice and corn without the benefit of any on- Bejasa v. Court of Appeals33 likewise held that to prove sharing of harvests, a receipt
site fact-finding investigation and report. This certification became the basis of the or any other evidence must be presented as self-serving statements are deemed
emancipation patent and subsequently, TCT No. E-103 issued on March 1, 1988, inadequate. Proof must always be adduced.34 In addition –
which was less than two months from the issuance of the unsubstantiated DAR
certification. Coincidentally, October 21, 1972 is the date Presidential Decree No. 27
was signed into law. The Bejasas admit that prior to 1984, they had no contact with Candelaria. They
acknowledge that Candelaria could argue that she did not know of Malabanan’s
arrangement with them. True enough Candelaria disavowed any knowledge that the
Neither was there any evidence that the landowner, Virginia A. Roa, freely gave her Bejasas during Malabanan’s lease possessed the land. However, the Bejasas claim
consent, whether expressly or impliedly, to establish a tenancy relationship over her that this defect was cured when Candelaria agreed to lease the land to the Bejasas
paraphernal property. for ₱20,000.00 per annum, when Malabanan died in 1983. We do not agree. In a
tenancy agreement, consideration should be in the form of harvest sharing. Even
As declared in Castillo v. Court of Appeals,28 absent the element of personal assuming that Candelaria agreed to lease it out to the Bejasas for ₱20,000 per year,
cultivation, one cannot be a tenant even if he is so designated in the written such agreement did not create a tenancy relationship, but a mere civil law lease. 35
agreement of the parties.29
Thirdly, the fact of sharing alone is not sufficient to establish a tenancy relationship.
In Berenguer, Jr. v. Court of Appeals,30 we ruled that the respondents’ self-serving In Caballes v. Department of Agrarian Reform,36 we restated the well-settled rule that
statements regarding their tenancy relations could not establish the claimed all the requisites must concur in order to create a tenancy relationship between the
relationship. The fact alone of working on another’s landholding does not raise a parties and the absence of one or more requisites does not make the alleged tenant
presumption of the existence of agricultural tenancy. Substantial evidence does not a de facto tenant as contradistinguished from a de jure tenant. This is so because
only entail the presence of a mere scintilla of evidence in order that the fact of sharing unless a person has established his status as a de jure tenant he is not entitled to
can be established; there must be concrete evidence on record adequate enough to security of tenure nor is he covered by the Land Reform Program of the Government
prove the element of sharing.31 We further observed in Berenguer, Jr.: under existing tenancy laws.37 The security of tenure guaranteed by our tenancy laws
may be invoked only by tenants de jure, not by those who are not true and lawful
With respect to the assertion made by respondent Mamerto Venasquez that he is not tenants.38
only a tenant of a portion of the petitioner’s landholding but also an overseer of the
entire property subject of this controversy, there is no evidence on record except his As reiterated in Qua,39 the fact that the source of livelihood of the alleged tenants is
own claim in support thereof. The witnesses who were presented in court in an effort not derived from the lots they are allegedly tenanting is indicative of non-agricultural
to bolster Mamerto’s claim merely testified that they saw him working on the tenancy relationship.40
petitioner’s landholding. More importantly, his own witnesses even categorically
stated that they did not know the relationship of Mamerto and the petitioner in relation Finally, it is readily apparent in this case that the property under dispute is residential
to the said landholding. x x x The fact alone of working on another’s landholding property and not agricultural property. Zoning Certification No. 98-084 issued on
does not raise a presumption of the existence of agricultural tenancy. Other September 3, 1998 clearly shows that the subject property Lot 2180-C covered by
factors must be taken into consideration like compensation in the form of lease TCT No. T-11543 with an area of 6,229 square meters and owned by Virginia A. Roa
rentals or a share in the produce of the landholding involved. (Underscoring is located within the Residential 2 District in accordance with paragraph (b), Section
supplied) 9, Article IV of Zoning Ordinance No. 880, Series of 1979 issued by the City Planning
and Development Office of Cagayan de Oro City.41 To bolster the residential nature of
xxxx the property, it must also be noted that no Barangay Agrarian Reform Council was
organized or appointed by the DAR existed in Barangay Lapasan, Cagayan de Oro
In the absence of any substantial evidence from which it can be satisfactorily inferred City, as all lands have been classified as residential or commercial, as certified by
that a sharing arrangement is present between the contending parties, we, as a court Barangay Captain of Lapasan.42
of last resort, are duty-bound to correct inferences made by the courts below which
are manifestly mistaken or absurd. x x x In Gonzales v. Court of Appeals,43 we held that an agricultural leasehold cannot be
established on land which has ceased to be devoted to cultivation or farming because
120

of its conversion into a residential subdivision. Petitioners were not agricultural At any rate, whoever is declared to be the rightful owner of the land, the case cannot
lessees or tenants of the land before its conversion into a residential subdivision in be considered as tenancy-related for it still fails to comply with the other
1955. Not having been dispossessed by the conversion of the land into a residential requirements. Assuming arguendo that Josefina Opiana-Baraclan is the owner, then
subdivision, they may not claim a right to reinstatement. 44 the case is not between the landowner and tenant. If, however, Morta is the
landowner, Occidental cannot claim that there is consent to a landowner-tenant
This Court in Spouses Tiongson v. Court of Appeals45 succinctly ruled that the land relationship between him and Morta. Thus, for failure to comply with the above
surrounded by a residential zone is always classified as residential. The areas requisites, we conclude that the issue involved is not tenancy-related cognizable by
surrounding the disputed six hectares are now dotted with residences and, the DARAB. 51
apparently, only this case has kept the property in question from being developed
together with the rest of the lot to which it belongs. The fact that a caretaker plants In Vda. de Tangub v. Court of Appeals,52 the jurisdiction of the Department of
rice or corn on a residential lot in the middle of a residential subdivision in the heart of Agrarian Reform is limited to the following: (a) adjudication of all matters involving
a metropolitan area cannot by any strained interpretation of law convert it into implementation of agrarian reform; (b) resolution of agrarian conflicts and land tenure
agricultural land and subject it to the agrarian reform program. 46 related problems; and (c) approval and disapproval of the conversion, restructuring or
readjustment of agricultural lands into residential, commercial, industrial and other
Despite the apparent lack of evidence establishing a tenancy relationship between non-agricultural uses.53
petitioners and private respondents, the DARAB improperly recognized the existence
of such a relationship in complete disregard of the essential requisites under To recapitulate, petitioners are not de jure tenants of Virginia A. Roa, to which
Presidential Decree No. 27. DARAB committed grave abuse of discretion amounting Presidential Decree No. 27 is found to be inapplicable; hence, the DARAB has no
to lack of jurisdiction in issuing an Emancipation Patent to Nicolas Jugalbot. jurisdiction over this case. The DARAB not only committed a serious error in
judgment, which the Court of Appeals properly corrected, but the former likewise
Once again, Benavidez v. Court of Appeals47 is illustrative in its pronouncement that committed a palpable error in jurisdiction which is contrary to law and jurisprudence.
an alleged agricultural tenant tilling the land does not automatically make the case an For all the foregoing reasons, we affirm the appellate court decision and likewise hold
agrarian dispute which calls for the application of the Agricultural Tenancy Act and the that the DARAB gravely abused its discretion amounting to lack of jurisdiction on the
assumption of jurisdiction by the DARAB. It is absolutely necessary to first establish grounds that the subject matter of the present action is residential, and not
the existence of a tenancy relationship between the party litigants. In Benavidez, agricultural, land, and that all the essential requisites of a tenancy relationship were
there was no showing that there existed any tenancy relationship between petitioner sorely lacking in the case at bar.
and private respondent. Thus, the case fell outside the coverage of the Agricultural
Tenancy Act; consequently, it was the Municipal Trial Court and not the DARAB On one final note, it may not be amiss to stress that laws which have for their object
which had jurisdiction over the controversy between petitioner and private the preservation and maintenance of social justice are not only meant to favor the
respondent.48 poor and underprivileged. They apply with equal force to those who, notwithstanding
their more comfortable position in life, are equally deserving of protection from the
Verily, Morta, Sr. v. Occidental49 ruled that for DARAB to have jurisdiction over a courts. Social justice is not a license to trample on the rights of the rich in the guise of
case, there must exist a tenancy relationship between the parties. In order for a defending the poor, where no act of injustice or abuse is being committed against
tenancy agreement to take hold over a dispute, it would be essential to establish all them.54
the indispensable elements of a landlord-tenant relationship:
As the court of last resort, our bounden duty to protect the less privileged should not
The regional trial court ruled that the issue involved is tenancy-related that falls within be carried out to such an extent as to deny justice to landowners whenever truth and
the exclusive jurisdiction of the DARAB. It relied on the findings in DARAB Case No. justice happen to be on their side. For in the eyes of the Constitution and the statutes,
2413 that Josefina Opiana-Baraclan appears to be the lawful owner of the land and EQUAL JUSTICE UNDER THE LAW remains the bedrock principle by which our
Jaime Occidental was her recognized tenant. However, petitioner Morta claimed that Republic abides.
he is the owner of the land. Thus, there is even a dispute as to who is the rightful
owner of the land, Josefina Opiana-Baraclan or petitioner Morta. The issue of WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-
ownership cannot be settled by the DARAB since it is definitely outside its jurisdiction. G.R. SP No. 81823 promulgated on October 19, 2005 is AFFIRMED. The Register of
Whatever findings made by the DARAB regarding the ownership of the land are not Deeds of Cagayan de Oro City is ordered to CANCEL Transfer Certificate of Title No.
conclusive to settle the matter. The issue of ownership shall be resolved in a separate E-103 for having been issued without factual and legal basis,
proceeding before the appropriate trial court between the claimants thereof. 50 and REINSTATE Transfer Certificate of Title No. T-11543 in the name of Virginia A.
Roa. The city Assessor’s Office of Cagayan de Oro is likewise directed
121

to CANCEL Tax Declaration No. 80551 issued to Nicolas Jugalbot


and RESTORE Tax Declaration No. 270922 in the name of Virginia Angcod Roa. The
heirs of Nicolas Jugalbot, represented by Leonila B. Jugalbot or any other person
claiming a right or interest to the disputed lot through the latter’s title are directed
to VACATEthe premises thereof and peaceably turn over its possession to petitioners
Heirs of Virginia A. Roa, represented by Lolita R. Gorospe. No pronouncement as to
costs.

SO ORDERED.

CONSUELO YNARES-SANTIAGO